Statement of Secretary Andrew Cuomo
March 6, 1997
on H. R. 2, the Housing Opportunity and Responsibility Act of 1997
before the House Banking and Financial Services
Subcommittee on Housing and Community Opportunity
Mr. Chairman and Members of the Committee: Thank you for
inviting me to testify on H. R. 2, the Housing Opportunity and
Responsibility Act of 1997, and more generally on the very
important matter of public housing reform legislation.
I believe we can enact historic legislation this year. I will
work day and night with this committee, with others in Congress
and other interested groups -- including those who are served by
the programs and those who administer them -- to obtain passage
of a constructive, and definitive, public housing reform bill.
We need a strong bill to improve the quality of life for families
who live in public housing. We're determined to create new
opportunities for the children who grow up there, to build
communities of hope and optimism.
The old developments are too often high-rise buildings with caged
hallways stretching into blocks of despair. Under the old public
housing program, the buildings are flawed; the policies are
flawed. We have to replace both.
We've made mistakes with public housing. Sometimes the original
site plan and architecture of the development was flawed; other
times, the buildings just wore out, outlived their useful lives.
Sometimes seriously flawed and callous management contributed to
the deterioration of the housing ... or neighborhoods changed
from residential settings to locations for manufacturing, for
warehouses -- sites where nobody wants to live, or should have to
None of us would justify allowing our children to live in these
conditions: segregated, dangerous, dense, isolated. Literally a
A word of caution here. This is not to stereotype all public
housing; we don't want to be misleading. The majority of public
housing is a success. It works, and it's a valuable resource.
It's well-run, a good place for families to live in. In fact,
out of 3400 housing authorities, only seventy-five are troubled.
And, where public housing is not working, we must face up to it
and fix it -- make it work for the families and communities it
Public housing is a vital part of many communities, the only
affordable housing alternative for a great many people.
Although it's a small part of our national housing resource, more
than one million public housing units represent more than one-
third (34%) of the housing that is affordable to extremely low-
income families. Families at about the minimum wage level.
In Baltimore, it represents more than one-fifth (23.4%) of the
rental housing affordable to these families.
In St. Louis, public housing accounts for more than half (55%) of
the rental housing affordable to extremely low-income families.
Cleveland's public housing makes up nearly seventy percent (68%)
of the rental housing affordable to these families.
And New York's nearly 160,000 (157,229) public housing units
account for sixty-five percent of the rental housing affordable
to extremely low-income families.
Nationally, public housing serves only about twenty-five percent
of the people eligible for assistance. And more than 5.3 million
pay fifty percent or more of their income for rental housing.
All across America, people -- and communities -- need public
housing. It's a resource we dare not waste.
We have to look at public housing in the overall context of
community development -- public housing and jobs, public housing
and transportation, public housing and services. We must break
down the walls between public housing and the rest of the
Public housing must not be a world apart. It can be, must be, a
proud and productive part of the community. It must become a
place of promise, a place to nurture and grow the seeds of
citizenship, a place to build opportunity for a better life and
commitment to a better country.
Public housing should not be a final destination, but a temporary
stop on the way to a better future. It should be safe and clean,
integrated into neighborhoods, a place where people can get jobs
and education, and move up the economic ladder.
Public housing should be a safe haven for children to play
freely, an important part of a family's effort to improve their
lives and take their place in mainstream America.
That's what public housing should be, and it isn't some pipe-
dream I'm talking about; it's the way public housing used to be.
In fact, much of it still is. Most public housing is -- and has
been for years -- safe and decent housing for countless families.
Families that get their economic lives in order and move on to a
fuller, richer life.
But we don't hear about that. We hear about the failures; and
that is as it should be, for we can do something about the
failures. That's why we're here today. To change the public
housing that isn't working.
We need a public housing bill to continue and strengthen the
transformation of public housing that is not working for the
people who live there, public housing that is a blight on the
Mr. Chairman, over the past two years, a consensus has developed
regarding the basic strategy for transforming public housing.
That consensus is due primarily to the leadership of former HUD
Secretary Henry Cisneros and you, this Committee, and the
Congress. Thanks to that leadership, we have made a substantial
start on public housing transformation. The kinds of reforms we
have achieved in the last few years have not only begun to change
the buildings -- the physical landscape of public housing -- but
the incentives for residents' behavior, as well. These reforms
I think we all agree that the various public housing programs
need to be consolidated and the tenant-based certificate and
voucher programs merged; that additional deregulation is needed
for well-performing PHAs; and that actions to address failing
PHAs need to become more predictable and more effective.
- suspension of the "one for one" replacement rule that is
allowing PHAs to demolish the worst of their stock. To
date, 23,000 units have been brought down nationwide;
- implementation of the Hope VI program, not only to rebuild
dilapidated public housing, but revitalize whole
- vigorous HUD intervention to turn around several large
- suspension of so-called federal preferences to enable PHAs
to admit more working families and build bridges to the
- adoption of "One Strike" to clean up crime and drugs in
- enactment of ceiling rents and optional earned income disregards to make work pay.
These are not political issues, they are not partisan issues.
They are issues we must resolve for the benefit of the people and
communities we serve.
I believe we have conceptual consensus on what we need to do to
"fix" that part of public housing that's "broke." And I will
work with you toward legislation that all America can be proud
of. We already have a solid foundation of agreement. I believe
we can build an historically significant bill that will make it
clear that a new day is here for public housing and tenant-based
assistance programs -- and especially for the people and
communities we serve.
Mr. Chairman, I would like to discuss some of the proposals for
management and policy reforms that will be part of legislation
that we will introduce. The legislation must successfully
perform a delicate balancing act, which has several components.
The bill must resolve the basic questions of who will be served by the housing programs and what rents they will pay, in a manner that balances pressing needs to create more viable public housing communities and to assist the least fortunate
The question of who will be served is largely determined by
income targeting. For public housing, I would support the
current law eligibility ceiling of eighty percent of median, with
requirements that forty percent of new admissions have incomes
below thirty percent of median and ninety percent have incomes
below sixty percent of median. With respect to each development,
as a minimum protection against economic segregation I would
support a requirement that forty percent of the development's
occupants have incomes under thirty percent of median.
On this question, H.R. 2 goes too far away from admission of
households with the most substantial unmet housing needs. The
income targeting proposed by H.R. 2 for public housing, that
thirty-five percent of the units be filled at all times by
households with incomes under thirty percent of median, would
mean that there is no effective income targeting with respect to
new public housing admissions. In most communities, the
percentage of households in public housing with incomes under
thirty percent of median is far more than thirty-five percent,
and thus these communities would be free to admit households up
to the program eligibility limit--eighty percent of the area
median, or about $32,000 on average--for years.
HUD's past positions on income targeting may have been somewhat
too restrictive in view of the need to broaden the mix of public
housing resident incomes. On the other hand, H.R. 2's proposals
are too open-ended. HUD's position strikes a better balance.
Congress has recognized that because tenant-based Section 8
consists of rental of private apartments throughout communities,
the program does not raise as severely the concern of over-
concentration of the very poor. Thus, it can be more targeted to
the neediest families than public housing. For that reason, the
federal preferences previously applied to ninety percent of new
admissions to tenant-based Section 8, but only fifty percent of
new admissions to public housing.
This distinction should be continued, particularly since the
incomes of those admitted to public housing must be broadened. I
strongly suggest that Congress retain the current law eligibility
limits for the tenant-based Section 8 program of fifty percent of
median with exceptions for previously assisted tenants, rather
than adopting H.R. 2's proposed increase to eighty percent of
median. I also urge adoption of the further targeting
requirement that seventy-five percent of new admissions to a
PHA's program have incomes under thirty percent of median. This
proposal is less restrictive than the targeting of tenant-based
Section 8 that existed under the federal preferences, but still
assures that this assistance largely is directed to those with
the greatest unmet basic housing needs.
With respect to rent rules, I propose that for the basic public
housing rent structure, we look at Congressman Frank's suggestion
last year that PHAs be able to charge up to thirty percent of
adjusted income. This proposal, enacted last year for the Native
American program, would allow PHAs willing to take the financial
responsibility to reduce or eliminate the disincentive to work I
discussed earlier. Minimum rents should be set at twenty-five
dollars per month, with a reservation of HUD and PHA authority to
require classes of hardship exemptions.
I also would support an expansion of the authorized ceiling rent
levels that will be paid for under the federal operating subsidy
(performance funding system) formula. The current law provides
for ceiling rents at the greater of market or the operating cost
of the property. Its effectiveness is compromised, however,
because the operating cost floors are sometimes higher than
market rental values for these developments and are too high for
the ceiling rents to help working families with incomes near the
minimum wage. The committee should consider a change to allow
ceiling rents at the greater of market or seventy-five percent of
operating costs. Such a change could boost the effectiveness of
ceiling rents, while maintaining adequate fiscal protections.
H.R. 2 has brought us closer to consensus relative to last year's
bill by offering tenants coverage under the Brooke amendment's
rent limitation to thirty percent of adjusted income. I applaud
the bill's sponsors for that step. At the same time, the bill's
proposal for allowing tenants annually to choose alternative flat
rents reflecting rental markets will cause confusion,
administrative complexities and in some applications, a loss of
revenue that the public housing system can ill-afford. In
addition, while the bill proposes Brooke rent protections, it
includes minimum rents at levels that are higher than needed to
make the point that all tenants should pay something. This will
cause hardship to the most destitute residents.
I am in full agreement with the goals of H.R. 2's flat rent
proposal as I understand them, which are to provide greater
ability for public housing to attract or retain working
households and promote greater PHA attention to the rental value
of their properties. HUD's "up to thirty percent" rent proposal
and expanded ceiling rent proposal largely would accomplish the
same purposes, in a simpler and more cost-effective way.
Both the House bill and the Senate bill contain provisions to
make work pay, through an eighteen-month disregard of income
earned by previously unemployed workers followed by a three-year
phase-in. While HUD supports provisions to help move public
housing residents into the work force, it is mindful of the
administrative burdens, the costs and the uncertain impacts of
this yet untested work incentive. I will work with the committee
and others to eliminate or reduce disincentives to work in our
housing assistance programs and to devise the most cost-effective
incentives we possibly can.
Finally, the concerns raised by H.R. 2's income targeting and
rent provisions are exacerbated in the authorization for open-
ended grants of public housing and section 8 funds to localities
in Title IV. The routing of these funds through localities does
not mitigate the need for basic income targeting and rent
protections to ensure that program funds are used for their
Both the benefits of allowing well-managed PHAs to make local decisions and the reductions in funding for both PHAs and HUD make responsible deregulation imperative
In a world where projected PHA resources are flat and HUD
staffing is projected to drop from 11,000 to 7500 persons,
substantial deregulation steps must be taken. I believe that we
can scale back both the HUD approvals and the submissions
required of PHAs, and take other important deregulation steps.
First, the PHA plan requirements responsibly can be scaled back.
Essentially, HUD approval should be limited to the areas of
greatest funding or program risk--capital plans, demolition or
disposition including disposition for homeownership, designation
of housing for use by particular populations such as the elderly,
and certifications that citizen participation and other processes
were followed. Additional basic information, notably admissions
policies including local admissions preferences, cooperation
efforts with welfare and employment agencies and security plans,
should be included and subject to the citizen participation
process, but reviewed by HUD only for completeness in the event
of a challenge. Of course, HUD would retain authority for
audits, collection of essential information and enforcement of
legal requirements such as rent rules and consistency of
admissions preferences with local needs. With respect to
reporting, various annual reports can be consolidated into one
Second, some further relief can be given to high performers. A
five-year strategic plan with annual updates generally would be
required. Instead of annual updates, however, high-performing
PHAs that have scored at least ninety points on PHMAP for at
least three years would submit only one interim report to HUD.
Changes made to the plan in years where a HUD submission is not
required would remain subject to the local citizen participation
Third, we can go further to deregulate small PHAs with 250 or
fewer units. These PHAs number about 2500, or over two thirds of
all PHAs, but manage only about 200,000, or fifteen percent, of
the public housing units. For these PHAs, the capital and
operating funds could be made fully fungible, a less complicated
Public Housing Management Assessment Program (PHMAP) evaluation
system with fewer factors could apply and basic strategic plans
(assuming the PHA is not troubled) could be submitted with the
same frequency as for high-performing PHAs. They would remain
subject to basic laws and approvals, such as rent limitations,
income targeting and demolition/disposition approvals, and of
course to audit requirements.
H.R. 2 includes some important deregulation steps, such as
permanent adoption of the reforms in the appropriations acts and
allocation of drug elimination funds and modernization funds for
small PHAs by formula rather than by staff-intensive competition
processes. It does not go nearly as far, however, as the steps
HUD is proposing. The local housing management plans required by
H.R. 2 in some specifics add to, rather than subtract from, to
In addition, H.R. 2 adds requirements which may sound desirable
but add administrative burden. These occur particularly in the
area of promoting resident self-sufficiency. All of us would
agree upon the goal, but it is unreasonable to require the PHAs
to enter into individual personal responsibility contracts with
residents in view of current public housing funding levels.
Instead, to the extent residents are on welfare PHAs should be
required to seek cooperation agreements with the agencies
principally charged with facilitating self-sufficiency of welfare
recipients, and be judged in PHMAP on their efforts to attract
employment-related services through means such as this. There
are other areas related to local flexibility where H.R. 2 is
silent or needs refinement. First, while I fully support the
repeal of the one-for-one replacement requirement, there needs to
be some means of giving communities undertaking demolition a way
to rebuild or acquire some replacement housing. Not all of these
needs can be met by vouchers or the Hope VI grant process.
Second, H.R. 2 allows PHAs to undertake site-based waiting lists
notwithstanding any laws or regulations to the contrary,
including civil rights laws. I will not support the override of
other laws, but I believe that site-based waiting lists in some
circumstances can bolster PHAs' ability to manage their
individual properties and increase the program participation of
working families. I will work with the committee to find more
acceptable authorizing language that meets civil rights concerns,
if authorizing language is deemed necessary.
The proposed oversight and enforcement system must promote more accurate identification of problems, more timely preventative action, more certain enforcement and more effective use of scarce enforcement resources.
It is clear that the current Public Housing Management Assessment
Program (PHMAP) has been a major advance in the identification of
problem PHA management over the prior system that was based upon
subjective HUD judgments. Recent studies have confirmed,
however, that the PHMAP evaluation system of simple indicators
regarding PHA management needs supplementation.
Recently proposed administrative changes to PHMAP will increase
the usefulness of the indicators. In addition, I feel strongly
that we must find a greater role in that system for physical
inspections of the properties. Improvement in PHA management
indicators means nothing to the families we serve unless
conditions actually improve, and PHMAP's relatively light
treatment of physical conditions compromises its credibility.
HUD intends to undertake inspections of troubled authority
developments annually, and to institute inspections at other
authorities on a regular basis. HUD also will increase the scope
of independent audits, so that they more regularly provide
information to back up PHAs' PHMAP certifications of management
H.R. 2 appropriately recognizes that improvements in the
evaluation system are needed, particularly regarding certainty
and effectiveness of enforcement. H.R. 2, however, prematurely
discards the current system for identifying problems. H.R. 2
would require a study regarding the potential advantages of an
accreditation system and other systems for evaluating PHA
performance, but would presume the results of the study by
requiring the creation of a new federal accreditation agency
irrespective of those results. It is hard to understand why
Congress would insist on the creation of a new federal agency,
particularly in these times of great budget stringency, prior to
receiving the results of a study undertaken to examine the merits
of such a proposal.
Most of the prior PHA accreditation proposals, such as that
contained in the Final Report of the National Commission on
Severely Distressed Public Housing in 1992, called for
accreditation to be a private peer review function undertaken by
a nonprofit entity rather than the federal government. Such an
endeavor might not necessarily replace PHMAP. Even that proposal
raises questions that need exploring, including whether any
increase it would bring in the accuracy of evaluations would
merit the additional administrative effort and what the proper
role of HUD would be. I would favor HUD participation and
funding if necessary for an industry-led study regarding the
merits of such a peer review approach. I would not favor a law
that presumes the results of any study.
Under Secretary Cisneros, HUD finally actively intervened to turn
around various troubled authorities. Those subject to HUD
takeovers in various forms have included Chicago, New Orleans,
San Francisco, Springfield, Illinois and some smaller PHAs. HUD
has also assisted court receiverships in Kansas City, Missouri,
Chester, Pennsylvania and Washington, D.C.
We have learned some lessons from these endeavors. Although
intervention is essential, it is not helpful, and clearly will
not be feasible in the future, for HUD itself to be deeply
involved in the staffing and operations of troubled PHAs.
Therefore, while I support the intent of HR 2's provisions
regarding takeovers and receiverships, I propose going further.
With respect to large PHAs with more than 1,250 units, I propose
that HUD be required to petition for judicial receivership where
a troubled PHA remains troubled after a year of operating under a
performance agreement. With respect to smaller PHAs, where
problems sometimes can be remedied sometimes fairly easily by an
alternative manager, I propose that HUD be able to choose after
the year between petitioning for a judicial receiver and imposing
an administrative receiver.
HUD's oversight should be particularly stringent where there are
the greatest risks regarding effective use of large sums of
money. Because of the funds involved, the large-scale
construction and the importance to the program of difficult
negotiations with private developers and investors, oversight of
the Hope VI program is critical. With that in mind, HUD will
insist upon private sector contract representatives who will help
to ensure that the expenditure of Hope VI funds is cost-
effective. HUD also advocates clear language contemplating
withdrawal of Hope VI funds from poor performers.
The final bill should make clear that a new day is here for the public housing and tenant-based assistance programs
As I stated earlier, public housing largely has been a great
success. Over the sixty-year life of the program, millions of
needy families have been housed successfully. The Section 8
tenant-based assistance program is still widely regarded as a
Nevertheless, there are enough dramatic problems with public
housing today that even the term "project" widely connotes
failure. These problems, however, already are being addressed.
Moreover, I believe we will agree upon a new law that will
address them further and result in a much more favorable
perception of the public housing program.
Given this situation, I can understand the Majority's desire to
repeal the U. S. Housing Act of 1937 as an indication that the
new law signifies a dramatic program departure. Apart from the
symbolism, however, our first obligation to the public is to
enact a statute that technically works as well as possible. Some
significant technical and substantive concerns have been raised
regarding repeal, and it is also incumbent upon us to come to
agreement on a symbolic statement that all of us will regard as
positive. I will work with Congress to bring about a
satisfactory resolution to these issues.
It is time to work together to pass a bill
I do not want to minimize the work that still will be needed to
produce a successful bill. I know that some of the positions I
am taking are controversial and not shared by some members of the
committee. Other issues are controversial among members of
Let us put our heads together to resolve the remaining issues.
With bipartisan effort, we can pass a bill that will put the
public housing and tenant-based section 8 programs on a sounder
basis. I invite you to work with me to achieve that goal.
Content Archived: January 20, 2009