Dear Mr. Oxley, Mr. Frank, Mr. Ney and Ms. Waters:

The National Housing Conference (NHC) wishes to thank the House Financial Services Committee for holding the roundtable discussion on the housing needs of the Gulf Coast in the aftermath of hurricane Katrina. Meeting both the immediate and long-term housing-related needs of the survivors of hurricane Katrina is of the utmost importance.

NHC is the nation’s most broad based housing policy organization, which for 75 years has worked for better and more affordable homes for all Americans.

As requested during the discussion, NHC offers the Financial Services Committee the following recommendations for housing relief strategies.

First and foremost, NHC recommends very strongly that a portion of the supplemental appropriations funding for hurricane Katrina disaster relief be used to provide emergency housing vouchers to those individuals or families that resided in the disaster area whose place of residence was destroyed or is currently uninhabitable. The Housing Voucher program is one of the most cost-effective ways of quickly providing emergency replacement housing to displaced persons, as the vouchers are used simply to make the rents of existing rental units more affordable, rather than for new construction. Legislation to accomplish this objective has already been introduced in the Senate by Senator Sarbanes in the form of S. Amendment 1662 to the FY 2006 Commerce-State-Justice Appropriations bill (H.R. 2862). Following the 1994 Northridge earthquake in Los Angeles, HUD successfully utilized an emergency appropriation of Section 8 vouchers to help those who were displaced without regard to whether an individual or family had previously had a housing voucher or been living in HUD assisted housing. For additional background, a copy of the recovery report from the Los Angeles Housing Department is attached.

While it is still too early to know the actual number of homes that have been lost, recent news reports have indicated that more than 140,000 people are housed in emergency shelters and hundreds of thousands of others have been temporarily relocated around the country. Regardless of how families are temporarily housed, the production of permanent safe, decent, affordable housing is needed for those who were forced from their homes by hurricane Katrina and whose homes are now destroyed. The best way to ensure the construction of new, permanent and affordable homes for renters and owners is to provide substantial federal financial support for a housing production program. Since much of the permanent housing is needed for low-income people, this housing production will require significant subsidy along with an increase in housing credits. Congress should therefore authorize and appropriate supplemental funding for a new program of project-based Section 8 subsidy, which is the most efficient way to ensure the construction of housing for low-income people who seek to return to their communities.

Once their immediate needs are met, hurricane victims will need help rebuilding the asset-bases on which their future financial success depends. A comprehensive approach to rebuilding the assets of hurricane victims, both renters and owners, would provide: (a) downpayment assistance (ideally in the form of silent, second mortgages) to help families rebuild their homes or purchase homes in new locations; (b) individual development account funds to help families rebuild their savings, while simultaneously building the financial skills and savings habits necessary for long-term financial stability; (c) funding to help poor hurricane victims living in subsidized housing participate in the Family Self-Sufficiency program, a promising HUD asset-building and self-sufficiency program administered by public housing agencies; and (d) an array of financial counseling services—including credit counseling, bankruptcy counseling, financial education and homeownership education—to help victims recover from the hurricane losses and regain financial well-being.

NHC also recommends the following proposals for addressing the recovery and rebuilding that will occur in the affected disaster areas.

• To ensure that government rebuilding efforts produce housing that meets the long-term needs of the affected communities, require that any new subsidized construction be mixed-income, with substantial portions affordable to extremely low- and very low-income families with the most severe housing problems.

• CDBG funds cannot generally be used for new housing construction. To maximize the utility of existing funding, Congress should grant jurisdictions in the disaster area temporary authority to use their CDBG funds for new housing construction. Congress should also consider providing additional emergency HOME and CDBG funding for affected areas.

• Deep subsidies (such as project-based Section 8) that make specific developments affordable to very low-income families are a critical resource for rebuilding mixed-income housing. To preserve this important resource, Congress should authorize the transfer of existing project-based Section 8 subsidies from properties that are not salvageable to other project-based locations, without requiring any new budget authority.

• It is likely that there may be some Section 236 and Section 515 projects that are also not salvageable. Congress should allow the remaining Section 236 interest reduction payment budget authority and Section 515 subsidy on these projects to be reprogrammed towards replacement housing without any new appropriations of budget authority.

• Public housing authorities should be adequately reimbursed for extra recovery expenditures and should receive adequate resources to repair, rehabilitate and replace lost housing.

• The Low Income Housing Tax Credit could be an even more effective rebuilding resource with a few changes in law to: increase the allocation of housing credits in impacted states; expand the ability of the affected state housing finance agencies to designate “high cost areas”; permit combining federal below market loans, other than tax-exempt financing, with the 9% credit program; and waive the prohibition against combining the housing credit with HOME funds.

Thank you for the opportunity to offer these proposals.

In closing, let me also suggest that, in a longer range context, as one of NHC’s principal leaders has suggested and as I share, this extraordinary challenge has shown that there are large gaps in our current housing delivery and resource systems that will not be resolved within the current boundaries and constraints of those systems. In addition to insufficient federal funding levels, these problems relate, for example, to obstacles that impede the consolidation of existing housing funding streams and a lack of coordination between housing problems and programs designed to meet other community needs, such as education and health care. If you wish to explore those challenges, we would be pleased to participate in any way we can.

Sincerely,