Research & Innovations

On January 14, in its first hearing of the year and the 2^nd session of the 116^th Congress, the full House Financial Services Committee under Chairwoman Maxine Waters (D-CA) held a hearing entitled “On the Brink of Homelessness: How the Affordable Housing Crisis and the Gentrification of America Is Leaving Families Vulnerable” with the following witnesses testifying: Karen Chapple, Professor and Chair of the Department of City and Regional Planning, University of California, Berkley; Matthew Desmond, Maurice P. During Professor of Sociology & Director of the Eviction Lab, Princeton University; Priya Jayachandran, President, National Housing Trust; Jeffrey Williams, Tenant Advocate; and, Michael Hendrix, Director of State and Local Policy, Manhattan Institute.

The hearing highlighted and continued to demonstrate Chairwoman Waters’ priorities of affordable housing and the homelessness crisis. As the Chairwoman noted in her opening statement, “We need to do more if we’re going to address the rental housing and homelessness crisis: we need to preserve the affordable housing that we have, and we need to increase investments in programs that develop new housing or provide rental assistance. We know what the solutions are to this problem; we just need the political will and resources.”

Lead-off witness Karen Chapple spoke to the impact gentrification and displacement have on the loss of affordable housing. Chapple noted, “Gentrification means that affluent and high-educated newcomers, usually accompanied by new real estate investment, move into a low-income neighborhood, often a community of color…Displacement may occur not just during or after gentrification, but also before, with gentrification nowhere in sight. Many more low-income neighborhoods are experiencing disinvestment than reinvestment. In these communities, landlords may disinvest in their property and/or displace tenants in order to make way for profitable reinvestment later. Because so many residents have already been displaced, when gentrification finally does arrive, there may be little additional displacement.”

Witness Matthew Desmond identified three main factors causing the affordable housing crisis: stagnant incomes over the last several decades with accompanying loss of jobs that do not pay enough to live on; an alarming rise in housing costs, with rents rising much faster than wages; and, the cumulative impact of years of inadequate federal funding for rental assistance. Citing statistics on the Housing Choice Voucher program, as an example, Desmond testified that, “only  one in six eligible families (16.8 percent) receive housing assistance from the U.S. Department of Housing and Urban Development in the form of public housing, a rent-reducing voucher, or a subsidized multifamily unit…Today, families spend an average of 26 months on waiting lists for rental assistance. In our largest cities, the wait time isn’t counted in years but decades. In October 2018, Los Angeles opened its waiting list for Housing Choice Vouchers for the first time in 13 years. I have two young children. If I applied for public housing today in this city, Washington, D.C., chances are I would be a grandfather by the time my application came up for review.”

Desmond cited his work at Princeton University on evictions, testifying that over sixteen recent years, more than 61 million eviction cases were filed in the U.S. transforming the nation from one where eviction was rare into a nation where losing your home has become commonplace. He also spoke of the toll paid by an eviction. “Eviction causes loss. Children often lose their schools; families lose their homes and neighborhoods; they regularly lose their possessions, too, which are taken by moving companies, piled on the sidewalk, or discarded by property owners. An eviction comes with a legal record, which prevents families from relocating to safe neighborhoods and decent housing because many property owners view such a record as disqualifying. Eviction records also bar families from public housing since Public Housing Authorities count eviction as a mark against their application, systematically denying help to the families who need it the most. This is why research shows that after getting evicted, families relocate to worse housing than they lived in before and to neighborhoods with higher levels of crime and poverty.”

Jayachandran testified to the importance of affordable housing preservation, coupling preservation with increasing the supply of new affordable housing by building new apartments, and the work her organization is doing to spearhead that effort. As Jayachandran noted, “In distressed neighborhoods, preserving affordable housing can catalyze the revitalization of an entire community. Saving decent, affordable housing means protecting a critical community asset. It also signals the reversal of what may have been years of neglect and disinvestments and can spark the public-private investment that is essential for community revitalization. In all communities, preservation protects the billions of taxpayer dollars already invested in affordable rental housing and results in a more environmentally sustainable and efficient use of resources…Without preservation new construction is at risk of only replacing units we lose and squandering scarce resources: preservation costs 30-50 percent less than developing new units. Preservation also frequently can be accomplished more quickly, without the burdens of lengthy regulatory processes and potential NIMBY backlash. We must preserve existing affordable homes and focus our new construction efforts on expanding supply versus backfilling.”

In a quietly powerful, moving, and at times heart-wrenching testimony, Williams, who was employed as a security guard, spoke to his personal journey through the hardships, bitter losses, setbacks, hurt, and feelings of failure as he, his wife and three children were evicted from their rental home. Recounting his experience, where paying their landlord $900 a month in rent was over 50% of their monthly income, Williams said, “Every month, we had to struggle to make that first of the month payment. In our house, the rent eats first. We’d rather go hungry than risk being out on the streets…During this period where my income was going up and down, we sadly fell behind in rent…It was morning time when the knock came on the door. We were getting the kids ready for school. The sheriff’s men were outside. They told us, ‘You gotta get out, get your stuff and get out!’” Williams detailed the experiences he and his family endured for three years along with the stigma, shame and real-life consequences they suffered being classified as “homeless” as they sought to stabilize their lives. Williams and his family finally found a landlord willing to take a chance on them, and two weeks before Christmas 2019 they moved into their new home.

Hendrix testified that “America must allow more housing supply where there is housing demand. Not doing so actively harms low-income and marginalized Americans. State and local governments must lower the regulatory barriers standing in the way of new and more affordable housing. And the federal government can play an important role in informing and incentivizing housing reform…Housing cannot become more affordable without becoming more available…America’s lack of affordable housing has three answers: building more units, subdividing existing units, or subsidizing rents.” Hendrix spoke to existing zoning laws and regulations as contributing to the shortage of affordable housing, saying “communities across America should ease regulations governing land use, full stop…Moreover, housing should not be burdened with unnecessary minimums on lot size or parking or restrictions that have nothing to do with health or safety.” Hendrix concluded his testimony by cautioning, “but whatever we do, we must avoid the temptation to solve a problem rooted in regulations with more regulations. We cannot legislate the laws of supply and demand. But together we can help America’s housing market become both free and fair.”

Today, HUD’s proposed rule on Affirmatively Furthering Fair Housing (AFFH) was published in the Federal Register. The new rule comes after HUD sought comment on amendments to AFFH regulations through its Streamlining and Enhancements Notice in late 2018.

In our comments on the 2018 Streamlining Notice, CLPHA and Reno & Cavanaugh advocated that in a new rule, HUD should implement safe harbors that would provide protection for PHAs making reasonable efforts to affirmatively further fair housing, provide additional resources to PHAs for data collection and other activities required to analyze impediments to fair housing, and incorporate a more nuanced view on fair housing strategies that includes preservation and revitalization efforts.

The new proposed rule contains substantial revisions to the process of documenting, monitoring, and evaluating AFFH compliance. The proposed changes include:

• A new definition of what it means to AFFH;
•  A new compliance process in which jurisdictions would submit at least three goals that it plans to focus on to “advance fair housing choice”;
• A scoring system, using metrics that are yet to be determined, to evaluate AFFH compliance and identify “high-performing” jurisdictions;
• Rewards to those jurisdictions deemed high-performing on AFFH, such as preference points on NOFAs as well as additional program funding from “reallocations of recaptured appropriated funds and other forms of regulatory relief.”

Despite significant proposed changes, HUD has largely ignored comments from CLPHA and other industry groups on ways to create a more reasonable AFFH compliance process and recognize good-faith efforts that PHAs are making to affirmatively further fair housing. Instead, HUD is proposing a new AFFH process that may be just as burdensome and opaque as the 2015 assessment tool. Some of the metrics that HUD is proposing to use in the evaluation scoring system, such as housing prices, are well beyond a PHA’s control while other metrics, such as level of HCV reserves, are far outside the scope of an evaluation of AFFH activities.

CLPHA is also concerned about HUD’s use of a “rewards” system for high-performing jurisdictions that includes NOFA points, program funds, and deregulation opportunities. Such a system would monetize AFFH compliance and allow some PHAs to benefit from AFFH compliance while penalizing others.

Comments are due on March 16. CLPHA and Reno & Cavanaugh will be submitting comments on the proposed rule and CLPHA will announce plans shortly for soliciting member feedback.

Questions about the rule can be addressed to Senior Research & Policy Analyst Emily Warren at [email protected].