Transcripts For CSPAN2 Hearing On Tax Incentive Impacts On Affordable Housing 20220723

The finance Committee Meets this morning to discuss how this hearing comes at a time when americans are getting clobbered by climbing rent and home prices, key drivers of inflation. Data released last week shows rent increased in june at the fastest rate since 1986. Buying a home is getting more expensive. Many people that have modest incomes for big Student Loan Debt feel like the dream of homeownership has slipped out of the reach. The root causes the United States isnt building enough housing. The shortage is affecting citizens and cities all over america. For example, my hometown of portland the skyrocketing rent and of low supplies is also an issue in the central oregon, Southern Oregon and Eastern Oregon where they cant build enough housing fast enough to keep up with demand. I would be willing to bet we would be talking about a number of issues this morning and i would just like to raise a relatively new issue that deserves scrutiny and that is private equity firms with sophisticated companies armed with terabytes of housing data who bring up properties nationwide. They are using algorithms to outbid americans who just want to own a home. Why do they want to get into the housing market, because they are upward 330 million and there are not enough homes for all of them. Huge demand, limited supply typically people on a budget are going to come out on the losing end of that sort of thing every time. The cost of housing is also pushed up by state and local redtape. The zoning rules band the kind of construction that is most needed and perpetuates segregation. In some places it can take years of tireless work to get a ruling and then you have the big upfront costs. Fortunately others need to do the same. You can save a lot of individuals suffering and taxpayer dollars tomorrow by building more Affordable Housing today. The bottom line when it comes to housing, the u. S. Needs to build and then build some more. The finance committee plays an Important Role in helping get shovels in the ground because much of housing policy deals with tax policy. Ive proposed the decent affordable and safe housing for all bill thats about getting help to the more Vulnerable Children and families experiencing homelessness and it would also create credit for more affordable rental units, housing and encourage more middle Income Housing without taking a single penny away. They tell me they badly need more incentives to build for middleclass families. The committee has had a Bipartisan Coalition working on important housing issues for a long time. Senator cantwell has long been the housing champ leaving big legislative expansions with more than 150,000 new affordable homes. I think she would agree that that is a good down payment for housing. At the same time recognizing theres lots more to do. At the credit improvement act which im proud to sponsor with senator young and one of our colleagues that is here, senator portman. That bill has even more flexibility to build even more housing. Senator cardin and senator portman proposed a bill called the Neighborhood Homes investment act. Finally we continue our bipartisan work with senator leahy, senator collins offering the lifeline act. The bill creates more flicks ability for states, local governments and tribes to use existing firms to get more Affordable Housing bills. Finally while there is bipartisan interest in getting this approach done legislatively, the treasury has substantial authority to accomplish a lot of what we are seeking to do on their own with rule changes, so today we are going to make sure the direction is getting the congress and the Treasury Department to move more quickly together and getting it done will provide important progress again ensuring access to more opportunities for Affordable Housing. Lots of ideas to talk about. Every member has an interest in this, so i hope that we wont be here eating our cereal in the finance room but a lot of my colleagues have lots of interest and i want to thank the senator for his work on another important issue. I appreciate your willingness as you are highlighting once again another of the bipartisan issues here with a strong record in the community. Last week we learned at the Consumer Price inflation despite the 9. 1 of the highest in four years and the Consumer Price index was up relative to a year earlier and rent was up by nearly 6 . To continue battling inflation. The Federal Reserve must aggressively raise Interest Rates and may raise them later this month by as much as a full percent. Inflation must be contained or we are at risk of the fed having to repeat what it did in late 1982 combat runaway inflation. Painfully then overnight Interest Rates were driven to 20 which crushed Economic Activity including housing markets that lead to a deep recession with higher Interest Rates set by the fed the Mortgage Rates follow making it all the more challenging for americans to biomes. Housing affordability is a critical issue in idaho and all across the country. Nationwide theres a shortage of 7 million affordable rental homes available to lower income americans and the gap between the demand and supply increases each year. To provide more Affordable Housing there are existing tools and the tax toolbox that provide incentives to create more affordable homes. The low Income Housing tax credit is responsible for generating a majority of all affordable rental housing created in the United States and enjoys bipartisan support in congress. There are 284 projects located across the state providing 12,000 plus units. These projects vary and are split between urban and rural with about 72 targeted and 28 for seniors and the elderly. One such project in boise targets homeless veterans. Several members of the committee have been active in working to improve existing Affordable Housing credits and to create new incentives. As i indicated on a bipartisan basis. Senators young and cantwell as well as others introduced the Affordable Credit act that would expand and strengthen for developing and preserving Affordable Housing. Senators portman introduced the Neighborhood Homes investment act that would create a federal tax credit that covers the cost difference between building and renovating urban and rural areas. Numerous other finance Committee Members are also interested in finding Affordable Housing solutions and i thank them all for their work. While other credits are part of the solution to develop Affordable Housing, we must address other drivers increasing housing costs generally. For most in the current economy is the need to reduce inflation. Unfortunately its been allowed to run rampant and the necessary Federal Reserve actions are raised the cost of housing. To get materials to the construction sites additionally several economic factors leading led toa shortage of Affordable Housing. One way to alleviate the shortage would be to look into more manufactured housing. During this time, during his time the former secretary created the office of innovation to evaluate new ways to provide housing. They are often uncoordinated and unnecessary and overly cumbersome and present challenges to Affordable Housing by creating excessive cost that restrained development of Affordable Housing. Many of the markets with the most severe shortages and Affordable Housing have the most restrictive state and local barriers to development. We must work to reduce the barriers. The tax credits and jobs act and area where senator scott has done a good deal of work. The data released as recently as may of 2022 or excuse me, march of 2022 by the opportunities directory shows 49. 18 billion has been committed to and dissipate in investments into 60 of the funds target investments and Affordable Housing and Community Development. Homes are more than physical structures, they are a foundation for wealth building, stability and community cohesiveness. To lead the committee to some bipartisan solutions. Let me go through the witnesses. Andrea is here from oregon. To have the executive director she served in differing capacities since 2019 and previously the second witness we welcome the chairman of the National Association of homebuilders in Savannah Georgia we are very pleased he and the homebuilders are participating. The third witness is a senior fellow at the Hoover Institution distinguished professor of economics at the university of los angeles. My mother worked at the institution for many years and it was the ultimate complement of some of the executives that said she is so good with she still is a democrat so we are very pleased that you are here. The fourth witness we welcome you, president and ceo of the association for Affordable Housing and a treasury official working in this area with considerable expertise, so we appreciate the leadership in the fifth witness will be the chief production officer at walker and dunlap who previously served as a commissioner of federal housing in 2020 and is also extensive experience in the executive budget but also the committee on banking so we welcome her because we are going to have so many senators participate, we have to sticks closely to the fiveminute rule. You traveled the furthest, so start us off. Thank you. I want to acknowledge and appreciate the opportunity to testify on the vital role the tax incentives play on the delivery systems. Again for the record im the director of the Community Services and we serve as the health and finance agency. First off, mr. Chairman, thank you for your steadfast leadership and elevating the people of oregon and their Housing Needs collectively. Senator, i want to also acknowledge and uplift your support for Affordable Housing. Your leadership does not go unnoticed. For years, our nation has not built enough rental housing but the conditions and circumstances spurred by the pandemic have made the housing crisis particularly acute to which individuals with low income, individuals with families with moderate incomes are bearing the brunt of that impact. With rising Interest Rates escalating home prices, skyrocketing rent due to the mismatch between the supply and demand many wouldbe homeowners were often stuck left ranting and more the end of 70 of extremely low income renters. 70 . That 70 of individuals that have to make tough decisions every single month throughout the year about what bills they will be able to pay and how they are going to get by. The housing credit and housing bonds are by far the most essential production tool that we have at our disposal. Affordable housing simply has a highly successful public and private partnership and what we know is when we stabilize individuals and families we also stabilize communities which has an economic benefit. In the state of oregon nearly 70 of all financed in the last five years relied on bonds. The costs are increasing due to supply and many things i wish members of the committee are fully aware of. Housing finance agencies and our partners across the nation are doing everything we can to prevent the deals from falling through. They are too large and in some cases there are no resources to pull from to help cure the financing gaps. The most impactful thing congress can do is to pass senator cantwell and youngs yous Affordable Credit improvement act they would both expand and strengthen the housing credit and significantly increase the housing Credit Authority allowing us to build more properties in rural ontario oregon. The Affordable Housing credit improvement act also provide states greater flexibility to spread existing resources to the development by reducing the bond financing test from 50 to 25 and i urge congress to pass the bipartisan lifeline act introduced by senators leahy and collins. This would enable states and localities. By the means of Home Ownership senator cortez mass does Affordable Housing bond would an act simple and impactful improvements to the mortgage Revenue Bonds and mortgage credit Certificate Programs which are essential to serving low and moderate firsttime homebuyers. At the neighborhood investment act would establish a new tax credit model. Simply put, the housing credit crisis simply will not get better if congress does not act. In my last few seconds i would urge both and elevate my appreciation for the committee and we need congress to act. The action is going to come close to the committee and what decisions we will be able to make for the american people. I appreciate the time. Well said. Lets go next. Good morning. And thank you for the opportunity to testify today. Every american deserves access to safe, decent and Affordable Housing. Even after over 40 years in business, i still enjoy nothing more than handing over the keys to the first time home buyer but delivering a product is difficult. 69 of american households cannot afford the median price. But a year ago nearly one quarter of new homes were priced under 300,000. Today it is 10 . We also faced challenges with minority homeownership opportunities. Households under the age of 35 which is the typical firsttime homebuyer, 46 of white households owned a home but 17 of africanamerican households did so. Affordable rental housing creates stability for tenants and the Housing Affordability crisis is a result of failing to produce enough housing to match demand. If we are going to solve our Housing Affordability crisis, we must drive down the cost to build as well as the cost to own to rent. Well structured tax incentives can help achieve this. Many of these incentives serve the Public Interest and remain effective including the low Income Housing tax credit. However, others have failed to keep up with the changes to the tax code such as the mortgage interest deduction. For over a hundred years, they made homeownership more accessible, but it remains rooted in an increasingly outdated displays in the tax code. The changes brought by the tax cuts and the jobs act doubling the standard deduction significantly reduce the number of taxpayers. Prior to those reforms, typically 70 of homeowners with a mortgage today that number has dropped below 27 . In 2017, 80 was deducted by taxpayers earning less than 200,000. Today in 2018, that fell to 58 . Its simply missing the mark. The most effective way to promote and enable homeownership is to eliminate the mortgage Interest Rates deduction and replace it with a tax credit. 15 tax credit claimed against mortgage interest and state taxes would offer a more effective and progressive tax incentive. The credit should be phased out with incomes above 2,000 to 50,000 and joint filers with incomes above 500,000. Along these lines can be enacted on a revenue neutral basis starting in 26. This presents an opportunity to refocus the homeownership tax incentives so that the benefits flow to those who needed. We also recommended acting to boost production of affordable rental housing and the proposal for a middle Income Housing tax credit which addresses a growing need for affordable workforce rental housing. Congress should also address the many housing incentives that are not indexed for inflation such as the gains exclusion and we urge you to reconsider the current limits on assault reduction. Appreciating the bipartisan support to solve the Affordable Housing crisis. After all, shelter is a basic human need and the headwinds we are facing our strong. The index of the sentiment had its second largest drop ever for july in the singlefamily starts filled to a twoyear low. We had an opportunity to do something that not only makes good economic sense but will uplift the lives of millions of americans. Thank you very much for the important point. I know you are the president of your own Home Building firm so we are very glad that you are here. The next witness. Members of the finance committee, thank you for inviting me to testify today. Requiring progress on two fronts, one is expanding housing supply and the other is building that new housing at a much lower cost and current cost levels. The policy reforms that might be implemented in the government incentives that would advance the goals. Today i will focus on the reform areas one is increasing the use of manufactured housing which is much less expensive to build than traditional housing. The others in the process of building subsidize housing which has become expensive. The costs are high in part because the process of hope and homebuilding hasnt changed all that much over time compared to other sectors in the economy. It hasnt been as much is the as themodern production methods. At this point is for at least the last 80 years. The costs are so high and i know to the bureau of labor statistics reports the Labor Productivity growth and Residential Construction grew 11 between 1987 to 2016. This stands in sharp contrast to 150 injectable manufacturing over the same period which reflects the continued Technological Innovations in the factories of lower cost. Manufactured homes are much lower cost alternative to the traditionally built homes. These produce the cost saving technologies into the census data shows the cost of manufacturing homes are about 60 lower than traditionally built homes. Because of the substantial cost manufacturing production accounting for about 16 of construction in 1972. But since then theyve reduced. Removing the burdens could substantially increase this importance. One important requirement is that this imposes a negative setting as it is labeled as mobile homes or trailers. The undesirable aesthetic induces a cascade of negative effects including local zoning ordinances both of which are shorter durations of traditional mortgages and neither of which mortgage interest. The regulations for the adoption of manufactured housing made in the report commissioned by hud. The requirement together with creating specific programs that incentivize state and local agencies to more broadly manufactured housing outside could be a game changer increasing affordability and would be squarely consistent with president bidens proposals to increase affordability. The importance of reducing the cost of building subsidized Housing Construction costs particularly in the western United States. San francisco subsidized project is costing nearly 1. 3 million per small Apartment Unit just for renovation and refurbishment. The 2018 study found extremely large disparities in subsidized construction across the states ranging from 100,000 in one texas allocation location to a maximum of 750,000 per unit based on 2011 to 2012 data. The gao found a few allocating agencies had requirements to guard against the misrepresentation of costs and the gao also found weaknesses in the data quality and inconsistencies in the practice not including the full extent of costs. The gao also found particularly related to the lenders uc berkeley is innovation estimates each additional lender as an additional 6,400 in cost per units. Lawsuits also delay affordable development. In california against Affordable Housing they are often found in the offices of California Environmental quality act which is recognized within the states to block and delay the Development Rather than being used for the express purpose of protecting the environment. I recommend congress visit the recommendations including those that are collected and analyzed by a single federal entity. American Home Affordability can be increased by the adoption of lowcost techniques improving efficiencies in helping state and local agencies to create acceptable opportunities in areas of high demand. Thank you so much. Thank you. Mr. Roberts. Thank you for your leadership on Affordable Housing. National association of Affordable Housing lenders is an alliance of major banks, nonprofit and other Mission Driven lenders and investors of Affordable Housing and inclusive neighborhood revitalization. Our member banks in 2020 provided over 180 billion to finance affordable low Income Housing and other Community Development activities. And the members are the primary investors of the tax credits. So today we have bad news and good news. The bad news of course is tremendous cost and increasing the availability. According to the national natiol association of realtors, the prices rose nearly 20 last year but housing is not just the casualty of inflation. Its a cause of inflation even in 2020 they went up 11 when the cpi was rising 1. 4 . So, building housing is essential for me to get longterm inflation challenges under control. Last october about half of all americans said Affordable Housing in their communities was a major problem and that exceeded what they cited for other important problems like drugs, crime and covid19 health and economic consequences. The good news is we know what to do. The low Income Housing credit is widely considered the most effective and successful United States policy to produce affordable rental housing ever. 3. 6 Million Units so far and about 130,000 annually. Thats virtually all of the affordable production over the last 35 years and its equivalent to about one third of all comparably rent priced multifamily housing in the United States, so its had a major impact and it could do much more. Its also performed exceedingly well. The cumulative foreclosure rate is 0. 57 . Pretty amazing for low Income Housing. Then proposed Neighborhood Homes homes, investment act would take the Lessons Learned from the housing credit and apply them to a different problem which is to revitalize the struggling community and provide homeownership opportunities by building starter homes and rehabilitating homes. So we urge congress to pass the Bipartisan Senate bill 98 sponsored by senators cardin and portman and many others and that would produce half a million homes for homeownership and struggling communities over the next ten years. The broad increases in housing prices really mask tremendous diversity across the country. The median price of a home is 1. 6 million in toledo ohio its one tenth of that. It isnt economic to rehab were to construct those homes. The numbers just dont pencil out. We need to have Neighborhood Homes to fix that. The housing credit has been so effective, the priorities of course would be to pass the Affordable Housing improvement act. The key element to address or to first restore the temporary 12. 5 increase. We are losing ground rather than gaining ground today. And to increase the allocation cap by 50 over two years that would help every state in the country to produce more. Third, as suggested, reduce the bond of the financing requirement to the tax credit from 50 to 25 and to reform the qualified contract in the writer of first refusal provision to preserve affordability and extend the profit control of properties so we do know what to do. We just need to do more and we hope you will. Thank you. Thank you very much mr. Roberts. We will have questions in a moment, chairman wyden, Ranking Member, thank you for your bipartisan leadership on this issue. I am a chief production officer at walker and dunlap. A former assistant secretary of the department of housing and urban development. As you mentioned i also a former Senate Staffer so its an honor for me to be on the other side of the dais. Where i am is one of the largest providers of capital to the multifamily industry and the fourthlargest lender for all commercial real estate. We employed 1400 people across the country as a top Affordable Housing lender. This panel has already talked about the data that is for pretty clear. They spend more than half of the income on rent. They spend more time getting to work. Transit in their cars and buses and trains the lead with their families. So there are definite and very real hardships that are presented by the lack of Affordable Housing. That is why the conversation on increasing the housing supply is so important. The Affordable Housing credit act is a very important step forward. I will go over very briefly i know mr. Roberts you mentioned the benefits of that, but specifically we think it will be very helpful to increase the already oversubscribed 9 tax credit, lower the threshold for the activity bonds from 50 to 25 as well as making important reforms to allow the 4 credit to more easily be used for the rehab project. Increasing the housing supply using these tax credits as weve seen has translated into better economic opportunities. As one realworld example, you will allow me of the difference the tax credits make in peoples lives walker and dunlap financed an apartment complex 100 of the units were income restricted to those making 60 or less of the areas Median Income. All units have access to highspeed internet and appliances and a walkable transit oriented project close to the light rail station. Thats just one example. We have many examples. From where we sit there are other benefits including very low cumulative foreclosure rates, vacancies as well as a strong compliance for affordability. While important, i think it will be a big topic today as the Ranking Member you alluded to that is one side of the equation we must cut through regulatory barriers at the federal, state and local level that are holding back housing supply. An estimated 40 of Development Costs can be attributed to regulation at all levels and a record high costs for labor and materials or adding fuel to the fire. Federal obstacles include bond time frames for environmental and labor decisions as well as some antiquated rule. One example is the noise requirement, noise restrictions. Local policies like zoning, density, permitting and approval processes and other landuse restrictions are all examples. While other issues are in the hands of local citizens and their governments, federal policymakers provide a forum for best practices. Congress can and does leverage the supply of federal resources to increase the housing supplies. Governments can also Work Together at all levels to standardize policies, practices and timelines across different programs. In conclusion, i think everyone on the panel will agree that we need a combination of a lot of smaller local ideas as well as the big ideas to solve the housing crisis. Thank you again for the opportunity and i look forward to answering your questions. The next on the panel let me start with you i have town Hall Meetings in each of my 36 counties and overwhelmingly wild whatemployers tell me their top issue is is they cant find enough workers. My concern is particularly for the missing metal this morning. Middleclass folks, nurses, firefighters would be a pretty good example and i want to ask you and my colleagues we always try to operate under the theory that youve got to build a Bipartisan Coalition and focus on what works. Weve all been talking about the low Income Housing Tax Credit Program. So what ive said in this idea why dont we build on what works and to try to get shelter for folks like nurses and firefighters and middle income people across the country and when you talk about middle income people we are talking about families with 60 or 100 of Median Income obviously depends on the area in which people live but i would like your thoughts on how the homebuilders feel about the middle income tax credit. I heard you touch on it a little bit but i understand you supported it and thats some good news in the Pacific Northwest it also relates to the wellbeing of the product is in the industry because it creates more opportunities. So your thoughts. We believe the missing metal is the hardest area to serve because typically they buy them if they are on the Home Ownership side and if they are on the multifamily side they dont qualify for other subsidies even direct subsidies such as section eight voucher programs so they have a disproportionate amount of their revenue or income spent towards shelter, and they dont have the ability to accumulate down payments for even the lowest price Housing Available within the private sector. So, this tax credit would solve part of the problem and thats why we do strongly support it. It is a large part of that also. I know that in my community i experience people that they want to School Teachers and Police Officers and fire people to serve their community, but they put in restrictions that affect housing prices that force them not to live in that community. And so, i will tell you that my colleagues in the building industry want to build for every sector of america. We dont concentrate on one sector over another. We will be working with you and very much appreciate your support with respect to middle Income Housing tax credits and we need to have fresh approaches in terms of trying to on the snarls some of that red tape at the local level. Im very concerned about this trend of the private Equity Industry and what some are doing in the industry is exploiting loopholes in the tax code to maximize the returns for the purpose of Affordable Housing and i want to walk you through this because as far as i can tell we are losing like 10,000 Affordable Housing units per year for the loopholes like the qualified contract and low Income Housing Tax Credit Properties are supposed to remain affordable for 30 years however, this allows operators for private developers who are going to go out and rent units at higher prices and as i say thousands of units apparently are already being lost per year and projections are that its going to go up. Life proposed legislation to close that loophole and i would like your thoughts on why thats important. To be losing them through the loophole just taking us back in the wrong direction. Under the qualified contract provision was written when the credit was very young and immature and the Real Estate Market is very different. Its no longer serves its purpose and has now become an unintended exit ramp. This isnt something that the vent investors have been involved with but sometimes we see new investors come in. Mr. Roberts is highlighting a lot of these programs and essentially the infrastructure the rules were written decades ago and you heard me mention algorithms are being used to outbid americans who want to own a home. You were talking about 1989 nobody was thinking about algorithms so i appreciate the input. Thank you, mr. Chairman. Senator portman. In the parliament in the senate you can yield. Ive got to go to this meeting im just going to say i appreciate all the comments about the need to rehabilitate existing housing and singlefamily homes that are left out of the process right now. Its a piece of the puzzle we need to fix. Cleveland has 3,000 of these homes that are vacant and not being used and it would help in this effort if everybody acknowledges today that increasingly the dream is becoming out of reach for so many so i just want to acknowledge the work that youve done and others on the panel b appreciate your help on this and i think my colleague for allowing me to yield. Let me go to you first. The income tax serves as a surtax on Small Businesses and under recent proposals would subject active business. I think you would agree that would result in higher housing costs. Can you explain how expanding to include active Investment Income would result in higher rent . Sure. The consequences are especially acute because its just another cost associated with operation of an apartment complex so previously that income wasnt taxed. Now it will be and that will be passed along as part of the rate to cover it. There is no magic wand and how much rent is charged. They are absolutely directly related to revenue versus expenses. You have eluded to this already but what do you think the possibility of persistently high inflation means for Affordable Housing and how would higher longterm inflation affect Housing Development and utilizing federal tax credits . That is a great question and thank you. Persistently high inflation would mean high rent increases. Its no surprise if you think of it as a tax on everyone and everything as stated in the testimony higher rent prices also factor into the calculation. It is in fact inflation is also very important and considering the efficacy of low Income Housing tax credit and would mean they are less effective and would decrease their value as well. Youve discussed with us today as well the impact of regulatory and zoning policies however wellintentioned on the ability to deal with Affordable Housing needs in the country. Can you discuss any studies you are aware of that analyze these efforts to determine which land use and strategies are the most effective . Yes, senator. Great question. They are expanding substantially. When we look at the zoning regulations what we find is that the states with the most severe such as my state of california have the highest home prices and Construction Costs that rise as development is delayed due to lots of litigations and lawsuits that are often based on not in my backyard type of arguments. We look at estates and locations such as texas, kansas, states in the midwest that have lower Construction Costs and lower housing costs. So thereve been a number of peerreviewed studies that all kind of come to the same conclusion which is that landuse regulation drives up home prices, costs and depress american welfare and there is a lot of progress that could be made. Senate bill 1416 is an important step in that direction by requiring agencies to compile data and report on how they are managing their land and being held somewhat accountable for how they are dealing with the needs. Thank you very much. Next senator carper. I want to back up a little bit. Every now and then in the room we talk about the least of these in society. Matthew 25 says nothing about when i didnt have a place to live, when i was living out of my car or under a bridge did you do anything about it. We have an obligation to do something about it. Its not all in the federal government or the committee as you know. Its a shared responsibility with state locals, nonprofits and businesses as well and we welcome you here today with that spirit in mind. To talk about Housing Affordability and im sure in the other 49 states. In recent decades i come to the hearing as a recovering governor of a state from eight years and as issues weve worked on a whole lot. When i stepped down the homeownership rate but in recent decades the rapid growth and Retail Prices with of the lack of housing supply made it difficult for a lot of people to find a safe and Affordable Housing options as we all know. The problem is especially dire today as the constituents continue to feel the effects of covid19 pandemic and as we face the price increases in other parts of the economy. I would note the price of gasoline is beginning to come down and while we have a lot of Convenience Stores up and down the east coast into bunge in delaware the price of gas we saw yesterday was down to about i think 4. 36 which is a drop of almost a half a dollar the last couple of weeks. I was proud to work with senator chris coons from delaware and the congresswoman securing 78 million for the American Rescue plan to help tackle the housing crisis. These will average 500 to support the development and rehabilitation of Affordable Housing units throughout the state and coordination with the habitat for humanity, and outfitted with Many Organizations dedicated to addressing this same problem. One issue that deserves the focus is lack of Affordable Housing for senior citizens. As a population ages we must meet the specific needs of our seniors and on fixed income to require Additional Support services. My question for ms. Bell and mr. The others get away scott free on this question. How can we ensure tax incentives and other resources meet the unique and growing Housing Needs of our seniors let me say that again. How can we injure the taxes meet the Housing Needs of seniors . Thank you for that question, senator. I think you are raising a couple of really important points that elevate the unique situation that we are in related to supply and demand and specifically how the issue of supply and demand is causing other issues around lack of access, lack of affordability. I think the reality right now in this moment as we think about the tax incentive, than we think about all of the options in front of us. Theres a couple of things worth elevating which is one, being able to lower the threshold when we think about private activity bonds knowing that there is a restraint that a lot of communities are feeling around that. When we think about low Income Housing tax credits, we know what works. Weve seen success with that. We also know when we think about the lack of Affordable Housing issues that so Many Americans are facing particularly the aging population, we also know that we have to build Affordable Housing on all shapes and sizes that we have and being able to have transit oriented housing as we think about the needs of our seniors. We have some very real policy options in front of us today that we think will both reduce red tape, increase access to Affordable Housing in a re formative way and be able to build on what worked and where weve seen the most progress across the country for diverse populations including our aging population. Mr. Roberts replacing question. Excuse me. Thank you, senator and i would mention also those are two of our members and habitat of course fixes a quarter of Neighborhood Homes directly to your question one of the beauties of the housing credit is the states authority to direct those resources with the greatest needs including elderly housing. We have seen tremendous low Income Housing Tax Credit Properties that provide a load of services to the elderly in conjunction with the housing and including assisted living which is extremely hard for low income and elderly people to find. My time is expired. Could i take 15 seconds and just ask a question for the record i want to take a minute, not even a minute but just a moment to say my question and you dont have to answer to it now but in writing. Here it is. What resources are most helpful setting low income families up for success when buying a home for the first time . And how can we expand access to these . I will ask you that for the record. Thank you for being here. Thank you. Senator carper and we are very proud as well so i think you are going to get a good answer. Thank you mr. Germanic first let me answer senator carpers question in part by mentioning the neighborhood home investment act. You would be disappointed if i didnt. Thank you for the comments that you made. I wasnt in the Committee Room at the time for the cosponsorship on this and certainly senator wyden and senator crapo we have support from both branches of government. But i want to acknowledge the work mr. Roberts in his organization has done with regards to developing the legislation. We developed it as a needed to deal with Affordable Housing. Covid19 has underscored this even greater. Inflation has made it even more urgent in this regard and we are talking about the appraisal gap but the cost of building and renovating exceeds the value and therefore cannot be done under the regular commercial circumstances. This leads to the decline of neighborhoods as well as making the wealth gap in america. So, can you just elaborate as to how the current markets which is anything but a predictable and investors willingness to go into communities and how the neighborhood home investment act would help us to deal with that. Thank you so much for your leadership on this, senator. Neighborhood homes provide states with van allocated amount of tax credits. They would set their own strategies and priorities and run a Competition Among applicants to deploy those credits. Once an applicant wins an award, it would go and raise private capital and build or rehabilitate homes in this trust communities. Once those homes were sold and owner occupied, the credits would flow and the developers are of course in the picture. Theres also the provision to enable existing homeowners who need the rehabilitation to participate as well on a very simplified basis. Thank you. If you could respond to how this particular credit would help as it relates to neighborhoods that are traditionally neglected and to try to deal with the wealth gap we have in america. Administrative red tape that exists. And to further leverage the tax incentives that we have to make sure the spur Affordable Housing thats happening is available and accessible to particularly black indigenous indigenous and people of color communities and from a policy perspective being able to land those policies and the way that is practical in addition to the resources in this particular area. I would conclude by saying the news of the day for declining the housing markets we are seeing because of rising Interest Rates and rising costs so the urgency of dealing with this issues are greater today than when it was first introduced. So thank you senator cardin and thank you for your years of work on these issues that i look forward to partnering with the in the days ahead. A very strong at advocate for housing in the talk there about these housing issues and she likes the idea that we have got to increase supply and if we dont increase supply of you know what happens in this kind of market its constricted and prices just go up. A big part of this is increasing supply and i welcome my colleague great thank you mr. Chairman thank you for holding this hearing into the families every single one of you thank you. There are challenges when it comes to a portable health care and it runs from homelessness to lowincome to all of the above. Ive been working with so many in my state to figure out what is it that we need to do to address Affordable Housing. There is great legislation that i support that we need to get done and im hopeful and this committee where able to do something. One piece of legislation i wanted to do so bill im going to start with you and thank you for mentioning it in your opening which is the Affordable Housing bond enhancement act 4445 and it improves mortgage Revenue Bonds programs for youth talk a little bit about it. Can you explain how mortgage Revenue Bonds help low and moderate income families to help them buy homes and sustain them. Absolutely and thank you for your leadership on this. Essentially the Affordable Housing enhancement act would allow finance agencies did that are utilized bound resources on using the mortgage Revenue Bonds and financing ages we have been able to help over 3 million borrowers and the mortgage credit Certificate Programs have been able to help more than 3,060,000 families become homeowners. Also within this particular bill it would also be able to help us optimize low and moderate income families as well. At this particular time and we talked a little bit about it already on this committee when we have rising Interest Rates and a lack of affordable ownership of the home the reality is its falling further and further way to my own family thats been a reality. One of the most, one of the other factors that i think is really important to elevate that i was happy to see and this is increase in the mortgage Revenue Bonds Improvement Loan revenue. This increases up to 50,000 as it stands at 15,000 which has not been updated since the early 80s so we are talking talking about Home Improvements in necessary improvements particularly talked about it earlier as we think about our aging community and improvements and modifications that make the home not only livable but its also about quality of life. Thank you for this and i appreciate the support of the National Council and the association of realtors and the National Association of homebuilders and other renovations for their support of this piece of legislation. Its in alloftheabove approach. How do we help homeowners and help homebuyers and this is an area of the stone as well more choices for homeowners and we address all these issues. One area that i want to touch on briefly because i know i will run out of time but i cant believe the state and local relief funds provided under the plan really provide the ability to make historic investments in needed Housing Communities across the country so let me just say this. I would love to hear maybe ms. Wade your thoughts with a light a neck because this is an opportunity to take funds are to their leverage them to support lowIncome Housing. I think that would be a very important use of this funding. It would significantly increase the ability of states and local jurisdictions do more Affordable Housing. I believe congress is already stated a lot of these covid relief funds at the state and local level should be used for Affordable Housing so. After the program might low Income Housing tax credit was certainly be a huge step organ that direction. The housing leaders support the legislative fix to use the 500 million was set aside for that initiative. We could use it to build more of the supply for lowIncome Housing and everybodys ready to do it. This is an opportunity for us to get it right so this is why support the lifeline act in the recent you have all been talking about tax benefits. This is another one i hear that six of the potential for increasing your housing supply across the country to thank you all again and thank you for the good work you do. I think my colleague and i dont want anyone to think im going to wait to filibuster as we wait for a few more college but i appreciate my colleague from nevada making the point on the light when legislation which i touched on in my Opening Statement as well. This is a chance to squeeze more housing value out of the existing dollars and my colleague from nevada we have bipartisan support for it. Im pleased about it and u. S. Home prices have hit a new record afford it 16,000 in june. The sales continue to slide so i dont think we need much of a wakeup call. Thats certainly drives it home. What i was struck by a night like to give other panelists a chance to talk about it is my question to mr. Roberts involving examples of loopholes in laws that are hurting your ability to offer Affordable Housing. Mr. Roberts said this stems from a law that was written in 1989 but we are talking about laws in this area that is not for the dark ages were certainly ancient. Id like your thoughts about other examples of laws that you think bureaucratic articles are so thick that its hampering the ability to offer Affordable Housing. To mr. Konters pointed includes updated rules outdated rules and appreciate your leadership in working with the principals of supply and demand and we thank you for it but i also want to make sure that oaks understand that. In our part of the country we work very hard to try to figure out how in the future we wont have people working over here and living over here and going back and forth and outdated transportation of are there other laws . Heres what we are going to do since we have had the good fortune of having senator young comment. I can give him a chance to catch his breath. He is doing very good work on the Semi Conductor which we are glad to partner with him and he has been part of our Bipartisan Coalition on the finance committee for housing. With it there other outdated laws that loophole that i asked about lets hear from a strong at ticket for the housing. Thank you chairman for holding this important hearing and i think every one of our witnesses i have to tell you as i travel in a state indiana here from every community about the importance of Affordable Housing and the challenges the bar experiencing right now. This is being exacerbated by the current inflation challenges impacting the country and throughout my time in congress have done my best to remain focused on efforts to address the housing shortage. Ive been proud to work in particular with my finance committee colleague senator cantwell on the Affordable Housing credit improvement act. This bill is her witnesses know will help strengthen the low Income Housing Tax Credit Program which remains the most successful Affordable Housing program in the United States a Publicprivate Partnership in a bipartisan fashion with years. If they want to dress our nations Housing Affordability crisis to think its crucial that we passed legislation to improve the Affordable Housing program the light to hergram m. Passing the Affordable Housing act as it is possible. I asked her Witnesses Today and they should be an easy one. By a show of hands who supports the Affordable Housing credit improvement . Well thank you. Let the record show that all five witnesses support the Affordable Housing credit program. The record will show it and i almost dare anybody to say that they didnt but its a very important piece of legislation in senator young and senator senator cantwell have let on that and i appreciate it. Like it that the record show that none of the witnesses are under duress. Lets dive into why this bill for a moment has such farreaching support. Mr. Roberts can you kindly explain what makes the low Income Credit so help full. They share a common dna and what makes these credits work so well is a combination of factors. The first is private market. Credits only flow after development is completed in Public Benefits are flowing so we are not getting money away and hoping for a good result. We are paying only for success paying for success which is another thing ive been up to stun during my time in congress. My constituents insist upon it. By the way thank you for your leadership throughout the entire system. Its a very competitive market and those credits are limited to the states allocate them only through the highest party at 70s and to invest in those properties and if for any reason compliance does not follow through those credits are recaptured. The state administration ms. Bell and her colleagues have done an amazing job with these resources and we have tremendous confidence. They are targeted and flexible target to the greatest and flexible in how they are applied and a tremendous economic and currency benefit. Thanks so much for that. I like to focus on unifying issues in the chairman was talking about the china competition bill the wearable to put before the u. S. Senate. One reason i was working on this with we can rally around solving difficult challenges together across political aisles and across political philosophies and this Housing Affordability crisis is striking how it impacts various demographic and geographic areas and it doesnt seem to discriminate a lot did the problem is that falls on a diverse population and its so important to support programs and ideas that meet the needs of these communities so ms. Lee ohanian you talk about how the light or grams helps a grams helps arrange a people . Thank you very much senator and thank you for your support of Affordable Housing. Rest we write the problem of the lack of supply and Affordable Housing hits everyone unfortunately and one of the things that we see is the Light Program is very effective at people coming up the streets in the housing one of the only programs that has done so. We see a range of types of individuals and families living in supported family. 10 of our home was population includes people recovering from opiate addiction people with disabilities. It does run the gamut of some of our nations most vulnerable. Thank you so much. They descend out of time and they see a couple of other leaders as it other leaders of the release of these issues have entered the Committee Room so i look forward to continuing discussions about this bill and legislative priorities in my questions for the record. Senator young before you take off and go back the Semiconductor Industry United States that like to note when you what you and senator cantwell have done has led people to say this is a solid approach to the housing policy that future homebuilders are responding with legislation that i proposed for middle Income Housing tax cuts like that approach so a firefighter will have the chance to climb the ladder of upward mobility so good work senator cantwell and your cell phone is. Senator hassan. Thank you mr. Chair for the hearing and thank you to our witnesses for being here today and for the work that you do. In New Hampshire here from families and Small Businesses alike about rising housing costs and what that has done to their ability to live and work in the state and their ability to recruit people to work in the state among other things. Im developing a package legislation i plan to introduce to paring down these costs. My will my bill would incentivize a trust fund. Ms. Bell can you talk about what these funds are and why they are so important . Thank you for that senator and they want to uplift your leadership on this. Oregon is one of 39 states that has a trust fund. These funds typically though not always have a designated Revenue Source and can be particularly helpful in providing additional Housing Resources for states. The state of oregon are trust fund is funded by a state general fund and lottery funds and as we work on this bill we look forward to working with you in this area. Biden l. Would support the construction of a Competitive Grant Program as head. Congresswoman can expand on how building more housing will help lower costs for homebuyers in how federal support and help build more houses . Absolutely. The crux of the problem is very simple we just are building enough houses. The more houses with no less pressure we have on rising costs because of our supply in the markets. I appreciate that very much and id note the more housing we have the more people who are housed the more other issues we work on together that we can address. Mr. Roberts i previously introduced Bipartisan Legislation by senator blunt the middleclass mortgage Insurance Premium that to provide tax cuts for middle less homebuyers who use mortgage insurance. How does mortgage insurance make homeownership more accessible and how can we continue to cut costs for families . Mortgage insurance is very important in that homebuyers you dont have a 20 down payment fund we often see them come in at five or 70 than 3 down payment and thats much more attainable for firsttime buyers. Cutting the cost of that mortgage insurance is very important in making sure they can afford the monthly payments. Thank you. Ms. Bell one more question response the covid19 Pandemic Congress quanah him should other states have committed to using a portion of these funds to support housing its difficult to pair these funds with another critical federal housing tool the low Income Housing tax credit and thats why cosponsored a bipartisan life on it to ensure the state has the flexibility to utilize covid19 Response Fund and the low Income Housing tax credit. Misspell how can increase flexibility on the dates to use these funds support housing across the country click thank you for that question senator. About 31 states are devoting over 9 billion in coronavirus state and local recovery bonds toward the Affordable Housing at 230 and of course this total does not include what local jurisdictions may invest in Affordable Housing and although the state of oregon is using these funds for other portable housing act gave these about 24 states have indicated they intend to use at least a portion of these resources ascap pillars so filling financing gaps which is the right thing to do. But it has not come without difficulty so within the American Rescue plan act statute there is unintentionally language in their that makes it difficult to use these funds for longterm loans which is what we need for Affordable Housing. This was a lifeline and would eventually fix the problem by allowing the state and local government to utilize these resources for longterm loans which of course support what we are talking about today financing more Affordable Housing. Thank you for that and i look forward to working with all of you as we continue to combat this challenge. We want to hear from senator cantwell whos been doing extraordinary work on these issues. Senator thune welcome to our witnesses this morning. Mr. Konter we are here to tug about tax incentives in Affordable Housing. I they like to start out by asking you about tax related incentives to Affordable Housing specifically im talking about paris which are taxes on lumber from imports from canada. Softwood lumber is critical to construction and the tariff rate on these imports increases u. S. Homebuilding costs harms Affordable Housing and pills to to to increase supply. Earlier this week senator menendez and i sent a letter to the Department Commerce and the ustr urging the Biden Administration to prioritize lumber trade to reduce housing costs so mr. Konter you agree reducing tariffs would make Home Construction and homeownership more affordable . Say i thank you for the question. And thank you and senator menendez for your leadership on this issue. Yes i do believe reducing tariffs on canadian softwood lumber would help to make homeownership more affordable. Lumber represents one of the most significant material inputs for the construction of the home. Trade measures on these inputs are necessarily going to increase costs of the final product. Conversely anything you can do to remove these trade tears is going to reduce the cost of the final product. And if i could also senator biden earlier said what kind of regulations are outdated or their trade policies kopech to the smoothawley act so if you think maybe if they are not working and we can get an agreement and we are structurally the structures built into the review process of that trade program does not have the act of us being able quickly on modifications to trade policies maybe we need to look at the overall picture of how we create our trade posies. I was going to follow up with a question about what we could do in a general sense and how the u. S. Canadas softwood lumber could then affect and i believe you address that in your last answer. Hopefully the Administration Takes timely action on these issues in bipartisan ways to help with Affordable Housing in the u. S. Housing community at large. Let me speak if i might for a minute to south dakota and housing availability and affordability are huge issue. I hear about these issues all the time from constituents especially in communities like rapid city which is quickly expanding and with supplier prices way inflated it makes it more difficult to start a Housing Project and according to the National Association of realtors they average cost of housing from 2013 to 2021 increased by more than 80,000 so if i might ms. Wade you to come this in your written testimony but could you share your insights on data and how its affecting livelihoods and families across the country . Senator that is a great question. By one estimate and by the way its seen it double. We have a shortage of 3. 8 million homes in the u. S. Which is staggering. Its almost hard to grasp. There are a lot of things that have become together to address this urgent need at the federal level and discussing things youve worked on senator at the state and local level as well as the private sector for the lowIncome Housing tax credit brings together all of those various components and it is one way to act effective to increase Affordable Housing and it takes a lot of reform at the local level when it comes to things like zoning and when it comes to things like permitting delays and other policies at the local level and all of this has to be viewed holistically as part of the housing ecosystem in order to truly solve this problem. My time is expiring here but i just want to say with respect to that the Housing Development authority suggest that those who participate in these multiple federal housing programs simultaneously like a low Income Housing Tax Credit Program a combination of programs like hud the rules governing these programs can create challenges for state housing authorities in disincentivized Property Management to participate in these programs. I hope that is one of the things mr. Mr. Chairman that we can contemplate working for these programs to insure they are functional and affordable in these heavy burdens and compliance requirements that make it difficult for those out there that are tasked with trying to create more Affordable Housing options without being buried in amount the federal paperwork so thank you mr. Chairman. We will happily follow up with that. Next senator bennett. Mr. Chairman appreciate it and thank you for having this hearing. In colorado 14 years ago as the superintendent of Denver Public schools and it was uncommon to meet a teacher who didnt live in denver. Its impossible for teacher to afford that only denver at i had the colorado teacher deer visit me a month or so ago. Shes from a room at committee on the western slope of colorado and in passing she made the observation that 70 to 80 of her students in middle and high school where she teaches have to have two or three jobs just to live. This is a real failure on the part of our society and it creates work for housing in our state its getting to the point where we are losing businesses and losing medical practices because people simply cant afford to live in the state of colorado anymore. Housing costs are far outpacing outpacing in metro denver the average rent increase more than 14 and the median home price in Denver Colorado recently topped 600,000 which is up 20 from the previous year. We need to do more to modernize the governments response at every level, give greater flexibility and embrace innovation and promote housing stability as the crisis act with senator portman would do. The low Income Housing tax credit is the most effective to build new Affordable Housing and im coming to a question for you but thats why i strongly support senator cantwell and youngs Affordable Housing credit improvement act to expand and im also pushing for swift implementation. Earning up to 80 of median family and senator young and i led a bipartisan Bicameral Group for the release of a final workable rule on the average test. How would finalizing the rule expand Affordable Housing in this country . Thank you for the question, senator. In the experiences of the state around Affordable Housing the average income tax which congress enacted is an important new tool that will make housing credit more economically diverse and this is done by allowing owners to serve households earning up to 80 of the Median Income while at the same time still making sure that units are underwritten for some of the individuals and families with the lowest income so the average income tax does this by using rental income that is charged by the higher income but still lower income households to essentially offset the charge to households who may be very low or extremely low income. The proposed rule implementing the income tax was simply unworkable and some of the interest has chilled but there are some positive steps forward and we are grateful to you and the others that signed on to urge the treasury to focus on this particular area. I hope they will keep pushing. Im conscious of my colleagues so i will submit a question on homelessness for the record and healed. I think my colleague and weve been working together on these issues. Senator warner and senator cantwell works very closely. Thank you to the Witnesses Today for joining us. As the chair of the committee. The homeownership is increasingly out of reach for far too many families. Im glad that what senator wyden and senators are doing to schedule the hearing to work on this. I partnered on the tax credit to make sure that extremely low income renters dont have to pay more than 30 of their income towards housing and what happens in families like that everything is upside down when they are evicted. My first question for mr. Roberts we have a lot of homes that can provide good affordable first generational opportunities. Many of them some of you heard me on this committee as it could my wife and i lived in had more foreclosures in 2007 van any in america. When homeowners cant make the repairs themselves where they are snapped up by outofstate investors the problems are evidence so how can the neighborhood and i know he referred to it to address the shortfall on single homes to keep those in the hands of aspiring homeowners. Thank you senator for your leadership and everything you do in the Banking Committee is remarkable to see the comprehensiveness of your strategy. To fill the gap to build or rehab a home. Its not feasible for private developers or existing homeowners to improve and by extension the neighborhoods. When the homes are deteriorated most are singlefamily homes, so we cant really fix up those neighborhoods without addressing this problem. Neighborhood homes would allow states to deploy credit to just the right amount to cover that gap. We hear from people around the country with the zoning regulations have done to build new homes across the country. A comment on that and if we were to support and provide funding would that help increase the supply of housing . Theres a great deal of nimby in fact some of your colleagues supported yes in my neighborhood, and because of that, there tends to be zoning regulations put in place whether intentional or disparate they raise the cost of housing and therefore we cant build Affordable Housing through those requirements. So it is a great problem. Members face it constantly which has nothing to do with zoning but increases the cost of housing. So its a tremendous problem. I agree and think that is true across the board. Is there a way to propose . Funding to the local associations and municipalities that reform the regulations so that it will allow more Affordable Housing to be built and restrict any further regulations that would help add to the housing stock. And you agree with that . Yes, i do, senator. A body of peerreviewed Research Zoning and regulations and how those increase the cost of housing and press construction and my own research has looked at that as well and my coauthors and i find it would rise in the u. S. As a consequence of rolling back zoning regulations back to what they were in the 1990s were the early 2,000s. On the issues between the committee that i chair thank you for that. What an inflationary comment. We are going to be able to get both of the senators for the long interest and then its so appropriate. That was a plug for you in terms of i want to thank both of you and senator cantwell this is an area we all have approaches and im going to skip the part about the gaps weve indicated on the investment tax credit and very quickly get to two items. Something senator brown worked with me on and something i thought was very creative and worked closely with the Civil Rights Committee and are still by default if they could qualify for the traditional 30 year mortgage, we would provide a 20 year mortgage for the wealth accumulation. Homeownership is a huge component part of that. That combined with the payment assistance is a good one. Another area is Additional Support for the Financial Institutions we were able to get 12 billion in the grants and equity but its still not going to be enough so in a bipartisan way we should put together a tax credit that would give a tax credit to those entities and i think in terms of many of the companies you said in the aftermath wanted to do something on Racial Equity and theyve done a crummy job making sure they put their money where the promises are but if you put in longterm money its slightly larger at 20 years and a very effective tool to take what has been a narrow sector to try to expand the capacity. You were kind enough to work in my Office Putting this tax credit together. I would like to get your comments and suggestions on why you think its a good idea. We are excited by this proposal, senator, and i want to thank you and senator wicker and heidi smith. And chris van holland, my senator and neighbor. This could make a huge difference. They do the hardest work in the Community Development finance. They are designed to fill the gaps that other private sector Financial Service providers cannot on their own but they are great in Partnership Together and what your tax credit proposal would do is to be able to build those partnerships between Capital Providers and those on the ground to do it. A cd fis need longterm capital because the development requires it. Its the hardest kind of capital to get but it has to be available to cost that makes sense and your tax credit would lower the cost to enable those to greatly expand. I appreciate the work and hopefully we can move on this and my last 55 seconds for senator cantwell to make a slight pitch to the Committee Members and others on another Small Initiative section 113 that would take the legal act with a small amount of money literally in the millions start experimenting whether we could securitize some of this debt which again would be another tool to make sure we spread this capacity more. Ive been supportive of those Community Development efforts and will continue to do so. After the years of leading the committee and being out on the floor to make sure we have Semi Conductors in the United States. Make sure you get credit for that yesterday. Thank you mr. Chair man and thank you for holding this hearing on incentives for Affordable Housing and thank you for your leadership on the legislation you introduced on the middle housing the 2009 downturn that pushed a lot of people to different categories. On the tax credit in your legislation i want to remind people of senator hatch. He was a great leader and i like that you talk to the Housing First Initiative Part of the Veterans Community to show Great Success driving down the cost if you house people first youre driving down with population we would otherwise have to be seeing impacts from and i want to thank my colleague for his leadership trying to increase the low income tax credit by 50 . I guess people dont realize we got a little bump a few years ago and that expired at the end of last year so we are going to go down on the amount of tax credit. 90 gets built with the tax credit so it really is a governor if we dont increase it on solving the problem. I feel like i dont know why we cant get this out there. I dont understand why. I feel like painting a big supply message across may be one of the avenues. There are so many people that have written reports i could probably get a stack this high saying its a supply problem so i would like to hear from the witnesses why, why is it we are not breaking through on the supply message when when you talk about it its pretty easy on the demographics you have People Living longer increasing the demand and workplace issues like in seattle. We had a bunch of people fall out of middle income to low income that increased the demand. I dont get why we cant just admit that we have a supply problem and do something about it. So why we are not getting this across the goal line. I think you bring up some excellent points. I sit on a board of the at thebipartisan policy center e conducted a poll that had a very specific question about do you support increasing the housing tax credit and it was overwhelmingly bipartisan somewhere like 70 of all americans support it so its a bipartisan issue and the data overwhelmingly states there is a problem with housing supply directly tied to affordability and a variety of challenges. I think its an important step forward in increasing the supply. Everything youve done in your leadership will be a huge support. Anybody else want to talk about this . What is tragic as we had a housing crisis almost for a hundred years. The average price of a manhattan home in todays dollars is 1. 2 million. Our housing is expensive to build. There are some efficiency reforms we can implement and we can also implement zoning reforms that will make it easier and less costly for areas of high demand. One thing weve seen eve olive is a growing number of americans are really focusing on a small number of locations to move to including seattle and the west coast, including some parts of the southwest. Sadly some of those for example my home state of california, we make building very expensive. In my testimony, i mentioned one project in San Francisco is costing 1. 3 million just to renovate existing small apartments units. When you look at those type of costs youve got to scratch your head and say theres got to be a better way. I think as technologies advance and theres opportunities to increase these manufactured homes and change some regulatory requirements we have reason to be optimistic and the committee is very much focused on that and im optimistic that you can do that. I think we have an inflation problem and part of it is housing. Again back to this. I like the details but i think the details are almost irrelevant because if we dont get across the supply issue and get people to understand that it is a supply issue, can you make it more affordable, yes lets do that, but somehow all that discussion stops people from really understanding that it is a we are not going to get out of this no matter how many pledge to spend millions on a project we are not going to get out of this and so i do think its, i dont know. I have a suspicion that the market crash has more to do with this. I think it had a Chilling Effect when we should have realized what the crisis was going to do. My colleague senator bennett and senator brown talked about it a little bit. The crisis made everybody freak out about housing in general because people securitized a way to make more housing supply and literally house of cards then collapsed and people were blaming all sorts of people and then we did nothing but at that moment we also pushed more people into that demand market because it literally fell out of the economy. They literally fell out of the economy and we didnt do anything to meet demand. It used to be in the 70s or 80s or 90s you would hear housing. Where did that go . Its a supply issue and back to the idea of cost, the more we can reduce cost of the more we can expand supply. If california Construction Costs were not even at the average of other locations by the study california could have built 12,000 more units so until we recognize the Construction Costs are high, its going to be harder to expand unless we are going to push on the subsidy and push a lot more dollars into producing less expensive commodities and in a commodity that i met with some people who were charged with this mission and i asked them and they said it would cost 15 billion to get out of the problem. Like over ten years into they ay said no, probably five. So, quantifying how problematic this is, im all in for new ideas how to drive down cost but im going to give you the last word. I thought you had your hand up. I think your instincts are probably correct after the crash we under built by about 400,000 houses a year over a ten year period. There was delayed entry level market interests but kills millennials had household formations that were much later in life and they all hit at the same time. If you look at the demographics between boomers and millennials, its significant. So that all hit at the same time when we were breaking up a deficit just to meet with household formations would be in the future. So i think you are dead on with what you said and there was a change in the public sectors view of housing and i agree we havent had a true housing policy in the country since the 1980s. But the aspiration for singlefamily Home Ownership never went away. And thats where all those things collided and we have a problem with one not understanding exactly the significance of the crisis. I know we have to run to a vote but we shouldnt forget how important homeownership is as economic stabilities for families and so i hope we can rectify this into the chair man and i come from a part of the country in the northwest thats very plagued not that some of you, the texans and californians and others havent been to but weve got to step up to this and get some solutions. Senator cantwell, just one comment as usual you are spot on with respect to this being all about supply. Its always going to be about supply. And also, everybody should know to senator cantwells comments with respect to how some of the flyers use the derivative market back in 2009 that contributed to some of the problems. Before you came i talked about private equity and using algorithms to outbid americans who just want to own a home so weve got equity issues to pursue in a way that is consistent as we talk about this Publicprivate Partnership to build more housing supply. A special thanks for coming such a long way for this and giving your expertise and with that, the committee is adjourned [inaudible conversations] [inaudible conversations] [inaudible conversations]