Housing in the Heartland: Addressing our Rural Housing Needs

1[House Hearing, 119 Congress]2[From the U.S. Government Publishing Office]34                  HOUSING IN THE HEARTLAND: ADDRESSING5                        OUR RURAL HOUSING NEEDS67=======================================================================89                                HEARING1011                               	BEFORE THE1213                 SUBCOMMITTEE ON HOUSING AND INSURANCE1415                                 OF THE1617                    COMMITTEE ON FINANCIAL SERVICES18                     U.S. HOUSE OF REPRESENTATIVES1920                    ONE HUNDRED NINETEENTH CONGRESS2122                             FIRST SESSION2324                               __________2526                             JUNE 12, 20252728                               __________2930                           Serial No. 119-283132       Printed for the use of the Committee on Financial Services3334 [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]3536                            www.govinfo.gov3738                                __________3940                   U.S. GOVERNMENT PUBLISHING OFFICE4160-985 PDF                  WASHINGTON : 20254243-----------------------------------------------------------------------------------4445                 HOUSE COMMITTEE ON FINANCIAL SERVICES4647                    FRENCH HILL, Arkansas, Chairman4849BILL HUIZENGA, Michigan, Vice        MAXINE WATERS, California, Ranking50    Chairman                             Member51FRANK D. LUCAS, Oklahoma             SYLVIA R. GARCIA, Texas, Vice52PETE SESSIONS, Texas                     Ranking Member53ANN WAGNER, Missouri                 NYDIA M. VELAZQUEZ, New York54ANDY BARR, Kentucky                  BRAD SHERMAN, California55ROGER WILLIAMS, Texas                GREGORY W. MEEKS, New York56TOM EMMER, Minnesota                 DAVID SCOTT, Georgia57BARRY LOUDERMILK, Georgia            STEPHEN F. LYNCH, Massachusetts58WARREN DAVIDSON, Ohio                AL GREEN, Texas59JOHN W. ROSE, Tennessee              EMANUEL CLEAVER, Missouri60BRYAN STEIL, Wisconsin               JAMES A. HIMES, Connecticut61WILLIAM R. TIMMONS, IV, South        BILL FOSTER, Illinois62    Carolina                         JOYCE BEATTY, Ohio63MARLIN STUTZMAN, Indiana             JUAN VARGAS, California64RALPH NORMAN, South Carolina         JOSH GOTTHEIMER, New Jersey65DANIEL MEUSER, Pennsylvania          VICENTE GONZALEZ, Texas66YOUNG KIM, California                SEAN CASTEN, Illinois67BYRON DONALDS, Florida               AYANNA PRESSLEY, Massachusetts68ANDREW R. GARBARINO, New York        RASHIDA TLAIB, Michigan69SCOTT FITZGERALD, Wisconsin          RITCHIE TORRES, New York70MIKE FLOOD, Nebraska                 NIKEMA WILLIAMS, Georgia71MICHAEL LAWLER, New York             BRITTANY PETTERSEN, Colorado72MONICA DE LA CRUZ, Texas             CLEO FIELDS, Louisiana73ANDREW OGLES, Tennessee              JANELLE BYNUM, Oregon74ZACHARY NUNN, Iowa                   SAM LICCARDO, California75LISA McCLAIN, Michigan76MARIA SALAZAR, Florida77TROY DOWNING, Montana78MIKE HARIDOPOLOS, Florida79TIM MOORE, North Carolina8081                      Ben Johnson, Staff Director8283                                 ------8485                 SUBCOMMITTEE ON HOUSING AND INSURANCE8687                     MIKE FLOOD, Nebraska, Chairman8889MONICA DE LA CRUZ, Texas, Vice       EMANUEL CLEAVER, Missouri, Ranking90    Chairwoman                           Member91JOHN W. ROSE, Tennessee              NYDIA M. VELAZQUEZ, New York92WILLIAM R. TIMMONS, IV, South        RASHIDA TLAIB, Michigan93    Carolina                         AYANNA PRESSLEY, Massachusetts94RALPH NORMAN, South Carolina         RITCHIE TORRES, New York95ANDREW R. GARBARINO, New York        SYLVIA R. GARCIA, Texas96SCOTT FITZGERALD, Wisconsin          NIKEMA WILLIAMS, Georgia97MICHAEL LAWLER, New York             BRITTANY PETTERSEN, Colorado98MARIA SALAZAR, Florida               JANELLE BYNUM, Oregon99TROY DOWNING, Montana100101                      C  O  N  T  E  N  T  S102103                              ----------104105                        Thursday, June 12, 2025106                           OPENING STATEMENTS107108                                                                   Page109Hon. Mike Flood, Chairman of the Subcommittee on Housing and110  Insurance, a U.S. Representative from Nebraska.................     1111Hon. Emanuel Cleaver, Ranking Member of the Subcommittee on112  Housing and Insurance, a U.S. Representative from Missouri.....     3113114                               WITNESSES115116Mr. Richard Baier, President and Chief Executive Officer,117  Nebraska Bankers Association...................................     4118    Prepared Statement...........................................     6119Mr. David Garcia, Policy Director, Up for Growth.................    12120    Prepared Statement...........................................    14121Mr. Ian Maute, Director of Development, Buckeye Community Hope122  Foundation, on behalf of the Council for Affordable and Rural123  Housing (CARH).................................................    20124    Prepared Statement...........................................    23125Mr. David Lipsetz, President and Chief Executive Officer, Housing126  Assistance Council (HAC).......................................    55127    Prepared Statement...........................................    57128129                                APPENDIX130                              LEGISLATION131132H.R. ----, the Strategy and Investment in Rural Housing133  Preservation Act of 2025.......................................   100134135      HOUSING IN THE HEARTLAND: ADDRESSING OUR RURAL HOUSING NEEDS136137                              ----------138139                        Thursday, June 12, 2025140141             U.S. House of Representatives,142             Subcommittee on Housing and Insurance,143                            Committee on Financial Services144                                                    Washington, DC.145146    The subcommittee met, pursuant to notice, at 1:30 p.m.,1472128 Rayburn House Office Building, Hon. Mike Flood [chairman148of the subcommittee] presiding.149    Present: Representatives Flood, De La Cruz, Rose, Timmons,150Fitzgerald, Downing, Cleaver, Tlaib, Williams of Georgia,151Bynum, Pressley, and Pettersen.152    Also present: Representative Nunn.153    Chairman Flood. The Subcommittee on Housing and Insurance154will come to order. Without objection, the chair is authorized155to declare a recess of the committee at any time.156    This hearing is entitled ``Housing in the Heartland:157Addressing our Rural Housing Needs.''158    Without objection, all members will have five legislative159days within which to submit extraneous materials to the chair160for inclusion in the record.161    I now recognize myself for 5 minutes for an opening162statement.163164     OPENING STATEMENT OF HON. MIKE FLOOD, CHAIRMAN OF THE165 SUBCOMMITTEE ON HOUSING AND INSURANCE, A U.S. REPRESENTATIVE166                         FROM NEBRASKA167168    First of all, I would like to thank our witnesses for being169with us today, and I very much look forward to hearing your170testimony on the topic of housing in rural America. Thank you171for coming 30 minutes early, given the House's schedule today.172    So far this year, we have focused this subcommittee's work173on the rising cost of housing in America. We have spent our174hearing in March focusing on the underlying driving force175behind the problem, and that is a lack of housing supply. In176May, we had an opportunity to examine some of the alternate177building methods that can bring supply online for less cost178like manufactured housing, modular housing, and even early179stage experiments with 3D printing homes.180    Today, we are going to dig into the challenges with181building housing in rural America. The problems in the rural182parts of our country are a little different than those that we183see in the urban areas. While a rural area may have lower land184costs, the logistics associated with getting homes built in185rural areas can introduce some unique challenges that drive up186costs, such as it is more expensive to transport building187materials to a remote part of the country.188    Longer supply chain means more cost, and those costs are189often passed down to the home buyer or the renter. Rural areas190may have fewer contractors and subcontractors nearby to do the191work needed to build the home. Labor shortages can lead to192expensive delays on a project or even stop projects altogether193when an area simply does not have the experts needed to do the194work at all. Alternatively, it can mean bringing labor in from195further away from the project site, which contributes to higher196labor costs overall. Again, these costs are passed down to the197home buyer or the renter.198    However, as we examine what drives costs in rural housing199markets, we will also see some common themes that we have200already discussed in this subcommittee that will reemerge,201namely regulatory burdens from the Federal Government that202often hit smaller communities with less resources the hardest.203    Through my work so far in Congress, I have identified four204key cost drivers in Federal housing projects. I call them the205four horsemen of the housing apocalypse. Number one,206environmental review requirements that delay a project's start207and drive up costs; number two, build America, buy America208requirements that drive up the cost of critical construction209materials and appliances, sometimes 20, even 40 percent more210than otherwise necessary; Davis-Bacon requirements, that from211what I have heard, are much more costly due to the associated212reporting requirements than they are for the actual cost of213paying prevailing wages; and number four, Section 3214requirements that make it more difficult to find contractors to215do the job, particularly in rural areas with some of the216workforce challenges that I mentioned.217    While many of these requirements are well-intentioned,218their combined impact significantly drives up costs of projects219using Federal dollars. I look forward to hearing from our220witnesses about both the challenges that are unique to rural221housing markets and how some of those common Federal regulatory222challenges affect projects in rural areas.223    Finally, this hearing will also serve as an opportunity to224explore the impact of Federal rural housing programs like the225United States of Agriculture's (USDA's) Rural Housing Service226(RHS). The RHS operates programs under Title V of the U.S.227Housing Act of 1949. The Section 515 program provides228affordable rental housing for low-income families, the elderly,229and people with disabilities. The Section 538 program provides230financing to increase the supply of rural housing for low-and231moderate-income people and the Section 502 program that makes232direct loans to low-income borrowers to rehabilitate or233purchase a primary residence.234    Ranking Member Cleaver has a draft bill noticed to this235hearing that would make some changes to these programs, which I236am sure will be a subject of discussion today with our237witnesses and our members. I am excited to dig deeper into each238of these issues today, and I look forward to our witnesses'239testimony.240    With that, I yield back.241    Chairman Flood. The chair now recognizes the ranking member242of the subcommittee, Mr. Cleaver, for 5 minutes for an opening243statement.244245 OPENING STATEMENT OF HON. EMANUEL CLEAVER, RANKING MEMBER OF246       THE SUBCOMMITTEE ON HOUSING AND INSURANCE, A U.S.247                  REPRESENTATIVE FROM MISSOURI248249    Mr. Cleaver. Thank you, Mr. Chairman. I also want to thank250you for giving a great deal of your time to this and other251issues related to contemporary housing problems.252    I represent the 5th District of Missouri, and my253congressional district includes Kansas City, Missouri, and the254surrounding metropolitan area. Before redistricting, I spent255nearly two decades representing a district that stretched from256Kansas City, Missouri, in the far west, to a city called257Slater, Missouri, near the center of the State. Slater is a258very small town of 2,000 that, unless you are a diehard fan of259Steve McQueen, the King of Cool, and know about the trivia at260his birthplace, you probably never heard of Slater.261    I spent a lot of time in rural America, having been born262there in Texas, but rural America is home to 20 percent of the263United States' population and growing, and covers more than 90264percent of the U.S. landmass. A lack of new construction,265limited investment in existing housing stock, and economic266constraints are driving a shortage of safe and decent housing267in rural America. Over 1/3 of rental units in rural America are268at least 55 years old.269    Preserving an increasing housing supply in rural areas is a270formidable challenge, but possible. Many small rural271communities face higher construction and material costs,272struggle to access private financing and philanthropic support,273and lack the capacity to navigate the complexities of Federal274programs. Many are also at risk of a disproportionate loss of275housing stock following extreme weather events.276    Strong public investment and public and private277partnerships are now needed. Chairman Flood and I have spent278time this week exploring ways that Housing and Urban279Development's (HUD's) Home Investment Partnerships Program can280better be tailored for increasing supply in smaller and rural281areas. In addition to HUD, rural development programs through282the USDA are specifically designed to address the unique283challenges in USDA-eligible areas.284    I thank Congressman Nunn for working with me on the Rural285Housing Service Reform Act, which would improve Federal housing286rural programs through USDA. This bill includes my Strategy and287Investment Rural Housing Act, which would preserve existing288housing, build new housing, and prevent unnecessary housing289instability. For many communities, these USDA-supported housing290constitutes the only affordable rental housing available. These291are low-income veterans, disabled individuals, and fixed-income292persons who need help and know housing there is available.293    At the same time, the Administration's cuts to USDA rural294development staff are having a detrimental impact. Office295closures and dramatic staff reductions do not create296efficiency; they create a backlog. My hearing concerning297reports of degraded services and impaired programs at USDA are298happening almost daily. The President has further proposed a299$600 million cut to USDA Rural Development and proposed to300eliminate or reduce nearly every rural housing program. This301includes the Section 502 Direct Loan Program, which has helped302more than 2 million individuals in low-income rural families303achieve homeownership. I will continue to work with my304Democratic and Republican colleagues to find productive305solutions to rural challenges.306    Thank you, Mr. Chairman.307    Chairman Flood. Thank you, Ranking Member Cleaver.308    Today, we welcome the testimony of Mr. Richard Baier, the309President and CEO of the Nebraska Bankers Association; Mr.310David Garcia, the Policy Director at Up for Growth; Mr. Ian311Maute, Director of Development at the Buckeye Community Hope312Foundation, testifying on behalf of the Council for Affordable313and Rural Housing (CARH); and Mr. David Lipsetz, the President314and CEO of the Housing Assistance Council (HAC).315    We thank each of you for taking the time to be here. Each316of you will be recognized for 5 minutes to give an oral317presentation of your testimony. Without objection, your written318statements will be made part of the record.319    Mr. Baier, you are now recognized for 5 minutes for your320oral remarks.321322 STATEMENT OF MR. RICHARD BAIER, PRESIDENT AND CHIEF EXECUTIVE323             OFFICER, NEBRASKA BANKERS ASSOCIATION324325    Mr. Baier. Good afternoon, Mr. Chairman, Ranking Member326Cleaver, and members of the Subcommittee on Housing and327Insurance. My name is Richard Baier. I am President and CEO of328the Nebraska Bankers Association. Prior to that, I spent almost3299 years as head of economic development for the State of330Nebraska where I was responsible for the State's affordable331housing program. Maybe just as relevant to today's discussion,332I also grew up in the small rural Kansas town of La Crosse,333which has a population of 1,266 people.334    Fortunately, Nebraska has had one of the lowest335unemployment rates in our country for more than a decade.336Conversely, many of our rural counties' peak population was337prior to 1960. Growing employers in rural parts of our State of338Nebraska routinely cite a lack of workforce housing as a reason339that they are unable to grow jobs.340    When evaluating the housing market in States like Nebraska,341one factor that we often look at is the age of our housing342stock. Recent research conducted by the Nebraska Investment343Finance Authority notes that 19 percent of Nebraska's housing344units were constructed before 1939. When the data is broken345down even further via the Rural Urban Continuum Code, the data346highlights that 28 to 36 percent of homes in Nebraska's most347rural counties were built prior to 1940. Quite simply, rural348Nebraska's housing stock, like that in other areas of the349country, is past retirement age.350    There are a number of unique challenges which limit the351ability of rural areas to maintain and build new housing. A352majority of the homes currently being built in our rural areas353of Nebraska are large custom homes, which carry a very hefty354price tag. Unfortunately, there is a clear lack of housing to355accommodate our working families.356    While it may seem counterintuitive to some, costs for357building new housing units in rural areas are substantially358higher when compared to similar units in urban areas, as359referenced by Congressman Flood. These cost differences are360driven by a myriad of economic and market factors.361Fundamentally, Nebraska, like other rural areas of our great362country, lacks supplies of material vendors, contractors, and363subcontractors necessary to build new housing units.364    Finally, there are very few buildable lots or developers365who are willing to take on the substantial risk associated with366building housing units in rural areas. In most cases, the only367way to build available housing lots is through public-private368partnerships, often driven by local units of government.369    While well-intentioned, use of our existing government370housing programs is severely limited because of differing rules371and regulations, varying definitions, mismatched application372cycles, and inconsistent qualifying income thresholds. As an373example, Federal rules currently limit the Low-Income Housing374Tax Credit Program to projects which service individuals with375incomes below 60 percent of the area median income. Conversely,376the National Housing Trust Fund is limited to those potential377tenants with incomes below 30 percent of Area Median Income378(AMI).379    Rural housing developers, to be successful, routinely layer380or stack these various programs to make their projects381economically feasible. I have one regional developer that I382know that estimates that the administrative burden of layering383these various programs adds at least 25 percent to the overall384cost of construction.385    Current government housing programs also have substantial386administrative and reporting burdens, as mentioned by387Congressman Flood, such as lengthy and expensive environmental388assessments. In response to input from member banks, the389Nebraska Bankers Association created our Rural Workforce390Housing Task Force in 2015, focused on finding new solutions to391our State's rural housing crisis. The most notable solution392resulting from this task force was the creation of our Rural393Workforce Housing Investment Fund, which was passed and signed394into law by then-Governor and now-Senator Pete Ricketts in3952017. Our fund provides State matching grants to local not-for-396profit developers in counties with less than 100,000397inhabitants, with a focus directly on creating new owner-398occupied and rental housing units. This fund uniquely does not399have income restrictions but rather limits projects by the unit400cost of construction.401    One unique caveat of the Rural Workforce Housing Fund is402that grant recipients cannot use any other Federal housing403programs, thus restricting the limits that might be placed on404these projects. To date, the State of Nebraska has awarded more405than $59 million in grants, which have been matched by $36406million in local funds. Our member banks have contributed most407of those dollars, and to date we have seen 331 new owner-408occupied units, 655 rental units, and 670 units currently under409construction.410    Thank you for the opportunity to appear before you today,411and I look forward to our dialog.412413    [The prepared statement of Mr. Baier follows:]414[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]415416    Chairman Flood. Thank you, Mr. Baier.417    Mr. Garcia, you are now recognized for 5 minutes for your418oral remarks.419420 STATEMENT OF MR. DAVID GARCIA, POLICY DIRECTOR, UP FOR GROWTH421422    Mr. Garcia. Thank you, Chairman Flood, Ranking Member423Cleaver, and the rest of the subcommittee for the opportunity424to appear today to discuss the urgency of the Nation's rural425housing crisis. My name is David Garcia. I am the Policy426Director at Up for Growth and Up for Growth Action. We are a427non-profit, non-partisan organization focused exclusively on428increasing the supply of housing across the country. We have429over 350 member organizations nationwide, which include430builders, advocates, and national trade associations, many of431whom actively build in rural communities, including members432such as Habitat for Humanity of Lincoln, Nebraska, the433Minnesota Housing Partnership, and the Homelessness and Housing434Coalition of Kentucky. Today, my remarks will describe some of435the unique challenges facing rural communities, their causes,436and the potential solutions for housing.437    Nationally, we estimate that the country is missing 3.79438million homes, which is a significant shortfall that is439spreading to other areas of the country that have been440previously considered affordable. Rural communities, as stated441earlier, they are home to 60 million people, or one in five442residents, and an increasing number of those people are443becoming overwhelmed by trying to pay the rent or afford a444home. An estimated 44 percent of rural renters are cost-445burdened, and half of those renters are considered severely446cost-burdened.447    Buying a home has become more difficult as well. In the 3-448years following the pandemic, home prices in non-metro areas449grew by about 36 percent, which is much higher than in450urbanized areas and these trends have not gone unnoticed.451Recent polling shows that 80 percent of rural residents believe452that housing affordability is deteriorating, and 76 percent453agree that America faces a significant housing shortage,454requiring immediate attention and increased housing455construction.456    A persistently high poverty rate in rural areas can457exacerbate these challenges. More than one in five, or 22458percent, of rural households report an annual income below459$25,000, compared to 18 percent nationwide.460    While the cost of living is comparatively lower in rural461communities at times, lower wages can make it more difficult462for residents to keep up with rising costs, making it harder463for new housing development to pencil out, especially when464considering the need to upgrade infrastructure such as water,465sewer, power, as well as roads.466    Many rural communities also lack capacity to approve and467plan for new homes. In many places, there may be just a single468planner to review applications, ensure compliance with469community rules, and issue permits. This lack of capacity also470means that the hard and expensive work of updating zoning and471land use rules is out of reach for many communities.472    Home building in rural America can be more expensive, as473noted already a couple of times. Given the high cost of474delivering building materials to rural construction sites and475the lack of economies of scale given the smaller size of many476rural developments, sourcing construction labor, contractors,477and other labor is also difficult, which obviously in turn478increases cost.479    While these challenges are mostly unique to rural America;480we also find that other obstacles are similar to those in481larger cities. For example, restrictive zoning can limit the482construction of different types of housing, such as483manufactured housing or accessory dwelling units. Local484opposition to new housing, which we commonly refer to as (Not-485In-My-Back-Yardism) NIMBYism, can stall, shrink, or even halt486new housing altogether, just as it does in urban areas.487    Thankfully, there are bipartisan solutions that Congress488can act on. Critical funding sources, such as the 30 percent489basis boost for rural housing projects proposed in the490Affordable Credit Improvement Act, can accelerate construction491and preservation of homes. In addition, the Rural Housing492Service Reform Act would bolster USDA's affordable housing493programs, while the Neighborhood Homes Investment Act would494incentivize home ownership through the rehabilitation of495existing stock for moderate income home buyers.496    The Road to Housing Act includes a provision to eliminate497the HUD permanent steel chassis rule for manufactured housing,498which would greatly reduce costs on the construction of an499important housing solution for rural America.500    Congress can also address the capacity gaps I mentioned501earlier through targeted assistance through programs like those502proposed in the Housing Supply and Frameworks Act and provide503policy support in the to-be-introduced Housing Opportunities504Made Easier Act, both of which are crucial to enabling rural505communities to modernize outdated zoning and streamline and506ramp up housing production.507    All of these proposals enjoy bipartisan support, including508from members here today, such as Chairman Flood, Ranking Member509Cleaver, Member Pettersen. Such partnerships really offer us an510opportunity to work together to deliver affordable, quality,511and safe housing to all Americans, from the most rural towns to512the largest cities.513    I want to thank you again for the opportunity to contribute514to today's hearing, and I look forward to continued dialog with515the subcommittee.516517    [The prepared statement of Mr. Garcia follows:]518    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]519520    Chairman Flood. Thank you, Mr. Garcia.521    Mr. Maute, you are now recognized for 5 minutes for your522oral remarks.523524 STATEMENT OF MR. IAN MAUTE, DIRECTOR OF DEVELOPMENT, BUCKEYE525    COMMUNITY HOPE FOUNDATION, ON BEHALF OF THE COUNCIL FOR526                  AFFORDABLE AND RURAL HOUSING527528    Mr. Maute. Thank you. Chairman Flood, Ranking Member529Cleaver, and members of the committee, on behalf of the Council530for Affordable and Rural Housing, known as CARH, we appreciate531the opportunity to submit testimony to the committee. This532statement outlines key issues impacting the rural multifamily533housing industry and provides recommendations that will534strengthen the Federal programs that preserve and expand535affordable rental housing, as well as bring additional capital536to increase the housing stock in rural communities across the537country.538    CARH is an industry trade association with headquarters in539Alexandria, Virginia, representing the interests of for-profit540and non-profit developers, owners, management companies,541lenders, and investors who all participate in the affordable542rental housing industry in rural America. My name is Ian Maute.543I am the Director of Development for the Buckeye Community Hope544Foundation, based in Columbus, Ohio. We are a non-profit545corporation that develops and facilitates affordable housing546for low-income families. I am also the current president of547CARH.548    Throughout rural America, there continues to be an549overwhelming need for both affordable and decent housing. The550lack of affordable housing reflects limited investments in551these localities. Rural renters are more than twice as likely552to live in substandard housing compared to people who own their553homes. With lower median incomes and higher poverty rates than554homeowners, many renters are simply unable to find decent555housing that is also affordable.556    While the demand for rental housing in rural areas remains557high, the supply, particularly of new housing, has decreased.558Neither the private nor public sector can produce affordable559rural housing independently of the other. It needs to be a560partnership.561    The United States Department of Agriculture's Rural562Development, or RD, Section 515 Rural Multifamily Housing and563Section 514 Farm Labor Multifamily Properties, are essential564for addressing affordable rural housing needs. Rental565assistance, or RA, under the Section 521 program is essential566for many families and elderly households residing in rural567America.568    At the same time, most federally supported multifamily569properties are over 35 years old and need modernization. These570properties have suffered from Federal funding shortages and571statutory and regulatory barriers that make recapitalization572either difficult or impossible.573    Over the next decade, as many as 3/4 of all Section 515574mortgages will mature, and with it, the end of the Section 520575rental assistance contracts, straining over 250,000 families,576elderly persons, without the ability to house themselves. Under577current law, when a Section 515 mortgage expires, the Section578521 RA also expires. Therefore, it is critical to establish579legislative authority to preserve the rental assistance after580mortgage maturity. With roughly 75 percent of RD properties581depending on Section 521 RA, this program is a financial582backbone of rural housing.583    The final appropriation legislation for Fiscal Year 2024584contains language that provided RD with authority to structure585a demonstration program that decouples RA from the Section 515586program for 1,000 units and properties where a mortgage was set587to expire in Fiscal Year 2024. CARH worked closely with RD on588the implementation of the decoupling program, which is also589known as Stand-Alone Rental Assistance, or SARA. The Fiscal590Year 2025 continuing resolution authorized 1,000 units eligible591for decoupling in the current fiscal year. We are very592encouraged by the strong and growing participation in the SARA593program, with eight properties consisting of 157 units enrolled594in Fiscal Year 2024 and 17 properties with 403 units already595confirmed for Fiscal Year 2025.596    We are optimistic that this program, as it becomes more597well-known, participation will continue to increase. However,598permanent legislative authority remains essential to ensure599that preservation can occur consistently and nationwide. CARH600continues to support the passage of legislation that would601allow for decoupling on a permanent basis.602    I would like to thank Representative Cleaver for his603support of the decoupling legislation in the previous Congress.604We are hopeful that similar legislation will be introduced in605this Congress.606    The Low-Income Housing Tax Credit, also known as the607Housing Credit Program, is a vital source for addressing608affordable housing in rural communities. It helps bridge the609gap between what the market provides and what market demands.610Approximately 43 percent of Section 515 properties are financed611with housing credits. Since its inception 36 years ago,612approximately 3.7 million affordable rental homes or units have613been produced.614    In multifamily rental housing, the 1-year impact for615building 100 apartment units is the creation of 161 local jobs616with $11.7 million in local income and $2.2 million in local617taxes and government revenue.618    One challenge impacting the effectiveness of the Housing619Credit Program in rural areas is the unresolved tax status of620Fannie Mae and Freddie Mac. Uncertainty over these621classifications under the Internal Revenue Code is compromising622their ability to participate in multi-investor housing credit623funds, which are essential to financing smaller rural deals.624Allowing them to fully participate in multi-investor funds625would greatly expand capital available for underserved areas.626    CARH supports legislation that would clarify that627government-sponsored enterprises are not subject to628restrictions for purposes of housing credit investment.629    CARH applauds the administration and Congress for advancing630Opportunity Zone reforms that better target rural communities,631the bill's requirement that 30 percent of new zones be rural,632and that 50 percent of capital directly support housing, jobs,633and infrastructure ensures that rural areas are----634    Chairman Flood. I am sorry, Mr. Maute----635    Mr. Maute. Yes.636    Chairman Flood [continuing]. your time has expired.637    Mr. Maute. Thank you.638    Chairman Flood. We would encourage you to submit that for639the record----640    Mr. Maute. Sure.641    Chairman Flood [continuing]. which we will gladly accept.642    Mr. Maute. Sure thing.643644    [The prepared statement of Mr. Maute follows:]645   [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]646647    Chairman Flood. With this, Mr. Lipsetz, you are now648recognized for 5 minutes for your oral remarks.649650 STATEMENT OF MR. DAVID LIPSETZ, PRESIDENT AND CHIEF EXECUTIVE651              OFFICER, HOUSING ASSISTANCE COUNCIL652653    Mr. Lipsetz. Chairman Flood, Ranking Member Cleaver,654members of the subcommittee, this feels a whole lot more like655choir practice than it does a hearing. I think we are all656singing the same tunes so far, which feels great. My name is657David Lipsetz, President and CEO of the Housing Assistance658Council, commonly referred to as HAC.659    HAC is a national nonprofit and CDFI that helps local660organizations in all 50 States construct good quality homes in661rural communities. We also pursue assiduously nonpartisan662research that this committee and other national policymakers663have been relying on for over half a century.664    As we have all discussed, 20 percent of Americans living in665rural communities, we play an outsized role in the Nation's666economy. We sustain and power the Nation with food, fiber, and667fuels. We have launched over half the small businesses, and we668maintain a trade surplus.669    The reality is that despite the vast wealth generated by670rural communities, many of the rural families are left facing671deep economic challenges. Wages remain stubbornly low. Median672family incomes in rural communities, 25 percent below the rest673of the Nation. Poverty remains stubbornly high at over 80674percent of the persistent poverty counties in rural areas. This675reality is neither a recent nor, I would suggest to you, an676accidental trend. It is not just free market forces and677individuals freely choosing where to live. Public policy has a678very heavy hand in this reality. If you hear nothing else from679me today, please know that there are economic, tax, and housing680policies stripping many heartland rural communities of their681economic engines, anchor institutions, and young people.682    The good news here, though, is that Congress can chart a683new course, one in which rural communities are treated fairly684by Federal policy and programs that are already in place and685that nearly all of us in this room support. These are things686such as the mortgage interest deduction, Fannie and Freddie,687government sponsored enterprises (GSEs), Community Reinvestment688Act (CRA), Low-Income Housing Tax Credit (LIHTC), Opportunity689Zones. All these things play positive roles in our housing690finance system, and yet all have design elements that steer691investment to the most overpriced suburban and urban markets in692the Nation while leaving most rural communities behind.693    These programs can be improved. They can make the cost of694capital for housing preservation and production affordable in695each of the markets where it is working and provide public and696private sector capacity in the communities that need it most.697    To prime the private market, put public funds to their698highest and best use, HAC encourages this subcommittee to699address rural America's housing needs with, one, a focus on700that capital in small towns; and two, building up the capacity701of public, private, religious, non-profit, and for-profit rural702housing providers.703    Let me use the remainder of this time to focus on two704issues. First, affordability is the greatest challenge in rural705America. Wages have fallen far below the cost of housing. Five-706point-six million rural households cannot afford the home they707live in. This includes millions of homeowners facing mortgages708and utility bills that eat up more than 30 percent of their709income and 44 percent of rural renters that cannot afford their710own rent. If you are not already aware, the affordability711crisis has driven a 30 percent increase in rural homelessness712over just the last 3 years. That is an unconscionable713statistic.714    Thankfully, many members of this committee and across the715House and Senate are supporting proposals that address the716crisis, including many I see here today that support the717Affordable Housing Tax Credit Improvement Act and its basis718boost for LIHTC properties, the Neighborhood Homes Investment719Act, with a tax credit that drives private investment into720housing production. It also closes the gap between the cost of721construction and the lower appraised values of many rural722homes.723    Second, bipartisan momentum exists for modernizing housing724programs that are designed for rural America and USDA's Rural725Housing Service. Housing champions in both chambers and on both726sides of the aisle have assembled a package of commonsense727improvements using public-private partnerships, expanding the728roles of Community Development Financial Institutions (CDFIs)729and capacity-building investments in local housing730organizations. You can find many of these in the discussion731drafts in Mr. Cleaver's bill.732    You also noted that they are supported by bipartisan733legislation on the Senate side by Senators Moran and Shaheen. I734really have to thank Mr. Cleaver and Mr. Nunn for continuing735the work in this chamber that has been launched by Ms. Smith736and Mr. Rounds on the Senate side in the Rural Housing Service737Affordable Act. Central to these bills is the public investment738we put into the 533,000 units of 515 housing; 350,000 remain.739We have the power to save them. Let us decouple rental740assistance.741    Once again, HAC appreciates the subcommittee's time and742your attention to this topic. I am looking forward to today's743discussion.744745    [The prepared statement of Mr. Lipsetz follows:]746    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]747748    Chairman Flood. Thank you, sir.749    We will now turn to member questions. I now recognize750myself for 5 minutes for questioning.751    Mr. Baier, in your written testimony, you shared some752details about Nebraska's Rural Workforce Housing Investment753Fund. The State program provides matching grants to local non-754profit developers and communities with populations of less than755100,000 people. These projects do not have any income756restrictions for inhabitants. Instead, the projects are limited757by the cost of construction for each home. New homes, single-758family home construction is limited to $325,000 per unit and759multifamily unit costs are capped at $250,000 per unit. Instead760of having an ongoing requirement that any tenant meets certain761income targets, this program is focused solely on controlling762building costs and bringing more affordable housing supply763online. This program has turned $59 million in State funds into764986 total completed owner-occupied and rental units, which765comes out to a little less than $60,000 in State investment per766built unit.767    One of the reasons I wanted to raise this program as part768of the conversation today about Federal programs is that this769seems much more prudent and cost-effective for building770workforce housing supply compared with how our Federal programs771operate, and I think there is a fundamental question. Why? It772is not trying to do too many things at once, in my opinion.773    Mr. Baier, if the Rural Workforce Housing Investment Fund774program required ongoing income verification requirements for775landlords and income requirements for any home buyer purchasing776a home, do you think those requirements would add cost and777bureaucracy to the program?778    Mr. Baier. Yes, Congressman, I do believe they would add779significant cost to the way that we administer our housing plan780in Nebraska.781    Chairman Flood. Mr. Baier, if the Rural Workforce Housing782Investment Program included a requirement that all building783materials and appliances used in a home be American made, would784that add cost to the program?785    Mr. Baier. Yes, Congressman, I do believe it would add cost786significantly.787    Chairman Flood. What if the program included requirements788that all contractors and subcontractors on the project tracked789and report the wages of every worker working on the project to790comply with a sliding scale calculation of prevailing wage791based on subcategories by profession? Do you think reporting792would increase costs?793    Mr. Baier. I do, Congressman. We struggle with many of our794subcontractors and contractors who may have one or two staff,795so it would be a significant administrative burden.796    Chairman Flood. What if the program included a requirement797that 25 percent of total labor hours on any project be done by798low-income workers and that 5 percent of labor hours must be799done by a business that has one of the following800characteristics: Number one, is at least 51 percent owned by801low-income people; number two, had at least 75 percent of the802company's labor hours performed by a low-income worker; or803number 3, is at least 51 percent owned by workers in Section 8804assisted housing? Do you think those requirements would805increase the program's costs?806    Mr. Baier. Yes, I do believe that would increase costs807significantly, Congressman.808    Chairman Flood. Thank you. The requirements I just809described are all requirements for the Federal dollars in the810HUD programs like the Home Investment Partnership Program, a811program that, like Nebraska's Rural Housing Investment Fund, is812designed to build housing supply. I am sure we all have members813and witnesses in this room that may agree with the intent of814some of those specific requirements.815    Paying higher wages, providing more opportunities for816lower-income workers, and using American materials in buildings817are all goals that I can understand. Every one of those818requirements carries a cost, and we need to be smarter about819weighing the tradeoffs of those costs against their benefits.820    Congress has a tendency to load up Federal programs with821ancillary priorities, which add cost and ultimately detract822from the main objective of the program in the first place.823These programs die a death of a thousand cuts. Each new824regulatory requirement on labor, procurement, environmental825reviews, and everything else slowly can take a housing program826and turn it into an expensive bureaucratic exercise. We need to827stop diverting resources from the framers, the plumbers, the828electricians necessary to build a home to the bureaucrats and829outside consultants necessary to fill out the paperwork.830    With that, I yield back.831    The chairman now recognizes the ranking member of the832subcommittee, Mr. Cleaver, for 5 minutes for questions.833    Mr. Cleaver. Thank you, Mr. Chairman.834    Mr. Lipsetz, one of the biggest barriers to using HUD835programs in rural communities, is often the amount of red tape836and regulatory burden that comes with funding. Small rural837communities are often not equipped administratively to navigate838the regulatory complexities of these programs.839    I have represented towns where the police chief was also840the fire chief and also the librarian. So when those programs841are available and we do not get rural communities requesting842some help because we do not have the assistance to even provide843help, they do not have many places to go.844    HUD programs were originally designed to serve cities and845urban areas. What changes would you suggest that Congress could846make to broaden HUD programs to smaller and rural communities?847    Mr. Lipsetz. Mr. Cleaver, thanks for your question. It is848very similar to Chairman Flood's, right, in that we are talking849about the intent of programs that I think generally we all850agree with, yet there are challenges in their application to851these programs, and they slow down, and they create additional852expense. Part of the reason that happens, that dynamic exists,853is because there is not enough money in these programs. When854the pie gets small, people fight fiercely for their piece. If855we had commitment to enough funding for people to live in a856decent and humane manner across this country, then we would not857have those fights for those small pieces.858    I think one of the things that best answers your question,859Ranking Member Cleaver, is that we help those smaller860communities build the capacity to apply for and receive the861funds we are talking about. There are HUD programs to do it.862Rural Capacity Building is a very specific one. I would also863suggest Rural Community Development Initiative Grants (RCDI) at864USDA. That investment right there from Congress will put865somebody on the ground in that hometown who has the ability to866cut through some of what exists in today's world, not some867magic world in the future where we have finally gotten rid of a868lot of these regulations, but very much today's process.869    Mr. Cleaver. So HUD and USDA should work together in order870to create whatever technical assistance would be needed. Since871these programs do, in many cases, actually overlap one another,872is that an alliance that you think would help solve the873problem?874    Mr. Lipsetz. I think I am one of the Nation's very few875people who have worked in both those buildings, and I can tell876you they operate in fundamentally different ways. USDA is not877HUD. Please do not entertain the idea of taking the Rural878Housing Service programs and plopping them down wholesale into879a building that has no capacity whatsoever to run them in a880retail manner on the ground in the kind of community you881suggested. There may be a few ways to do that but that does not882preclude us from putting HUD and USDA together to do alignment.883There is no reason that you could come up with that a property884being built needs more than one environmental review. I am885sorry. If you are layering it on at a State and Federal level,886multiple different programs because of how hard it is to gather887the funds, forget it. We need one environmental review at most888for a property built in the small town that you grew up in. I889have seen that picture of your house that you grew up in890hanging in your office, and that is exactly what we need to be891able to do for those communities.892    Mr. Cleaver. Thank you. Thank you very much. I remember893quoting you about not trying to implement programs by putting894one of these agencies inside the other or taking what they do895and merging them.896    Mr. Garcia, do you think that the requirements such as897Davis-Bacon prevailing wages are making it difficult for rural898communities to use HUD programs for housing?899    Mr. Garcia. Of course, yes, I agree with that. I think900there are two reasons for that. The first is that it kind of901shrinks the labor pool, particularly of contractors who are not902set up to track those kinds of requirements. As mentioned903earlier, there are a lot of ancillary policy goals that we904oftentimes put into these programs that are very well-meaning905but do add cost, and this would be one of them.906    Mr. Cleaver. Thank you.907    Chairman Flood. The gentleman yields back.908    The chairman of the full committee, Mr. Hill of Arkansas,909is now recognized for 5 minutes.910    Chairman Hill. Thank you, Chairman Flood. Thanks to our911panel for being here to help us think through the particular912issues that challenge housing and housing access and housing913affordability in rural areas. I thank the Chairman and the914Ranking Member for collaborating on this hearing.915    It is pretty challenging to do. I was a banker in rural916Arkansas for many, many years in Mississippi Delta. Chicot917County has a population of 7,500 people today.918    When I opened the bank there, it was probably 15,000, so it919has shrunk in 15 years to that amount. Ashley County has a920population of 18,000 and I would not think any of those921counties have stick-built home builders. They might have a922custom builder of a certain amount. So the things that I have923noted are you do not have a regular construction infrastructure924in many rural counties and there are no comps if you build a925new house, so you cannot get a secondary market financing on926the loan. It is going to be a portfolio loan for the most part.927    Flood program, there are frequently homes built on bigger928tracts of land that part of the land is in the flood plain. The929house is not. The house is on a 40-foot hill, but you have to930deed it out in order to be covered under Federal Emergency931Management Agency (FEMA), so it is expensive to survey. I have932seen some successes over those years. I have seen some grant933programs by the Federal Home Loan Bank be helpful to that934particularly I say a marginal multifamily developer in a rural935area. I have seen that be a good gap filler for a construction936loan.937    I am interested in, Mr. Maute, what are some of the biggest938challenges that you have seen in your list of what barriers are939in a rural situation?940    Mr. Maute. Sure. Thank you for the question. Developing and941building housing in rural areas, as you mentioned, there are942several challenges. The majority of the work that we do is943through the housing credit program, attracting investors that944are purchasing credits at the same prices as in urban areas.945Attracting construction debt, firm debt for small communities946is also a challenge. The projects that we build in rural areas,947just because of the size of the markets, are 24 units, 30948units, maybe up to 50 or 60 units, and just are not as949attractive to our financing partners that we want to work with.950So, putting our capital stack together can be difficult.951    On the construction side, finding high-quality, capable952subcontractors to build the projects is an issue. We work with953a handful of general contractors, and a lot of times they will954have subs that are nowhere near the geographic area that we are955in and that they will have to work on jobs simply because they956cannot find qualified contractors in those areas. So, it runs957the gamut from financing to construction to filling the units958with qualified residents.959    Chairman Hill. Would you find on the capital stack side, Do960you have any model of working in a State with a large rural961population where the public employees fund or something in a962State has--I would assume if you could hit some--volume is what963causes capital to not be attracted, just like if I cannot build96410 houses at once, I do not want to drive an hour and a half to965this place to start a construction job. Is there some way that966we could mobilize retirement financing or pension financing967because of the yields, if you have it, you think the yields968could be competitive if they were available to a long-term969fixed-income investor?970    Mr. Maute. Yes, that is not something that we have looked971at personally as far as raising that sort of capital, so I do972not know if I could really speak to that.973    Chairman Hill. How about you, Mr. Baier, any comments from974a good banker point of view?975    Mr. Baier. Mr. Hill, I think it is a great question. I976think we need to find all sorts of pots of capital to be able977to address this issue. The challenge is, unlike some of my978fellow testifiers, we are not talking about 60 units in rural979Nebraska. We are talking about one to five units, and trying to980generate a private sector type return on those investments is981really difficult, and that is why in many cases our banks get982involved in CRA activities, CDFI activities, those kinds of983activities really to be involved in that process because984otherwise, it does not make financial sense.985    Chairman Hill. Is it also tough on the extension of water986and sewer in these kinds of towns, too, or is that not as big a987barrier?988    Mr. Baier. It is a huge challenge trying to develop989buildable lots in most of our rural communities, and I am a big990believer in eliminating blight and substandard for that reason991and knocking down older homes.992    Chairman Hill. Right. Thank you very much. I yield back.993    Chairman Flood. The gentleman yields back.994    The gentlewoman from Georgia, Ms. Williams, is now995recognized for 5 minutes.996    Ms. Williams of Georgia. Thank you, Chairman Flood and997Ranking Member Cleaver, for having this very important hearing998today. Thank you, Mr. Cleaver, the Ranking Member of this999subcommittee, for your work on the Strategy and Investment in1000Rural Housing Preservation Act. This would expand the USDA's1001Rural Housing Service, as well as create a new multifamily1002rental housing preservation and revitalization program that is1003very much needed.1004    I might sound like a broken record because I said this the1005last time. Although I represent the fighting 5th District of1006Georgia, rural housing is important to me personally. I grew up1007in rural Alabama. I heard our Chairman, and other members talk1008about these small towns, and, Mr. Cleaver, the fireman might1009have been the police chief, but in the big city of Smiths1010Station, Alabama, where I grew up, we did not even have a1011police chief or a fireman. We have that one traffic light that1012only flashed in front of the high school. So, I know a little1013bit about rural housing because that is my lived experience.1014That is where I grew up. All of my family is still in the big1015city of Smiths Station, Alabama.1016    Although I represent a district that is centered in1017metropolitan Atlanta, I get it. I get the need for rural1018housing. Not only just that, I came to Congress because as a1019Member of Congress, I understand that the policies that I enact1020impact the entire Nation. So it is important to me to have1021policies that help everyone so that future generations of1022families and children have better opportunities and more1023quality housing than I did growing up because that home that I1024grew up in rural Alabama, it was on our family land, and we1025probably did not meet all of the regulations and all of the1026codes that needed to happen because my grandpa built that home.1027It had no indoor plumbing and no running water. There are still1028people in rural America that need us to fight for them, so I1029want to make sure that we are doing that part.1030    That is why I am thankful for Congressman Cleaver and1031Ranking Member Waters' work here on these important pieces of1032legislation because it is clear that while my colleagues and I1033and the Democratic Caucus are doing everything to honor1034Homeownership Month, some of my colleagues on the other side of1035the aisle are making it so much harder for homeownership in1036rural America and underserved communities. Whether it is this1037bill that we just voted on, the one big billionaire bailout or1038whatever you want to call it, or this proposed budget for next1039year. Many Americans are about to see in black and white in1040this budget which side of the aisle really cares about making1041housing affordable in this country.1042    Mr. Lipsetz, research from the Consumer Financial1043Protection Bureau found that people living in rural counties1044not only tend to earn lower incomes and experience higher rates1045of poverty but are also more likely to use expensive forms of1046non-bank credit. Mr. Lipsetz, how do you think these trends1047harm the ability of rural residents to save and qualify for1048affordable housing opportunities?1049    Mr. Lipsetz. Thank you, Congresswoman Williams, for your1050question. The ability for a rural household to save on average1051is quite strong, and yet the financial services surrounding1052them do not support that. My organization did an analysis some1053years ago of bank closures, and there is an astounding1054percentage of--I was trying to recall it. I was just asking--105560-something percent of the bank branches that have closed in1056the last 30 years, you do not have financial services when you1057live in places like Smiths Station, right?1058    Ms. Williams of Georgia. We had one bank, but still not1059quite enough to meet the needs of everybody who needed it.1060    Mr. Lipsetz. One other piece of the puzzle that I think you1061started to hint at in your opening remarks is heirs' property.1062You come from a family property that is going to be split1063unless there are significant legal documents in place, wills1064and other things. That property is going to be split and is1065going to be in danger of loss to your family and the wealth you1066have built up in it. My organization with Fannie Mae has now1067done analysis of what the extent of heirs' property is across1068the country.1069    I know this is not your question, but we are desperate to1070get Congress to take a look at the risks that half a million1071families in the United States face because their property is1072tied up in an heirs' situation that they cannot gain the full1073wealth of it.1074    Ms. Williams of Georgia. Mr. Lipsetz, you are right, it was1075not part of my question, but it is very important to me, and I1076actually have bipartisan legislation that I am leading with1077Congressman Byron Donalds right here on this committee to1078address heirs' properties, so I look forward to it.1079    I am running out of time here, as I always do, because I1080have so many questions when it comes to making housing1081affordable for everyone across this country. I look forward to1082working with my colleagues on this heirs' properties1083legislation that is bipartisan, that can truly help us maintain1084and build generational wealth in this country.1085    Chairman Flood. The gentlewoman yields back. The gentleman1086from Tennessee, Mr. Rose, is now recognized for 5 minutes.1087    Mr. Rose. Thank you, Chairman Flood and Ranking Member1088Cleaver, for holding this important hearing, and thank you to1089our witnesses for your time and being with us here today and1090sharing your expertise.1091    Mr. Maute, as you may be aware, there is a current1092statutory requirement that manufactured homes be built on a1093permanent chassis, which can add, frankly, thousands of dollars1094to the cost of a manufactured home. It is my strong belief that1095this is an outdated requirement that should be removed from1096statute, and I am working on introducing legislation again this1097Congress which would do just that.1098    Mr. Maute, in your opinion, would eliminating the statutory1099requirement for a chassis on every manufactured home increase1100the affordability and availability of these homes for rural1101America?1102    Mr. Maute. Yes, I believe it would increase the1103affordability and allow units to be created cheaper and in a1104more efficient and quicker manner.1105    Mr. Rose. I agree, and I also would say I believe it will1106open up possibilities for innovations in the manufactured1107housing space that will help us finally realize the true1108potential for manufactured housing to increase the stock of1109homes all across the country. I assume you would agree with1110that as well.1111    Mr. Maute. Yes, yes, we have dipped our toe, personally, at1112my employer on looking at manufactured housing, and some of the1113technology and innovations are amazing and what it would allow1114us to do--to just sort of smooth out the construction process1115and make it predictable and not at the whims of weather would1116be great and would help things a lot.1117    Mr. Rose. I would say remove the stigma maybe that is1118attached to the manufactured housing space. Do you think that1119is achievable as well?1120    Mr. Maute. I do.1121    Mr. Rose. Very good.1122    Mr. Baier, in your testimony you highlight that Nebraska,1123like other rural areas of our great country, lacks an adequate1124supply of material vendors, contractors, and subcontractors to1125successfully build new housing units, and certainly, I hear1126this all across Tennessee. As you noted, this is a serious1127problem all across rural America. What steps can we take to1128increase the supply of these critically important skilled1129workers? Frankly, if you will, speak to why is it--normally, I1130believe markets work. Why are markets not signaling adequately1131to cause those resources to come to bear?1132    Mr. Baier. Mr. Rose, thank you for the question. I would1133tell you, for me, it is a multi-pronged approach. We have to,1134as a country, begin to embrace trade and vocational education1135as first and foremost. We also have to educate parents that a1136trade occupation is a wonderful opportunity and a wonderful1137career that does not require a 4-year college education that1138comes potentially with hundreds of thousands of dollars in1139debt. As we make investments, we need to really focus our1140technical training on helping young people understand and1141embrace those opportunities and those trades.1142    Mr. Rose. I could not agree more, and our Governor in1143Tennessee, Bill Lee, has done I think an exceptional job of1144focusing attention on career and technical education, what I1145call vocational education. Having been a product of that1146through agricultural education years ago, I can personally1147attest to the process of discovery that happens in our1148agriculture (ag) classrooms in helping expose young people to1149the many trades and maybe help them explore what careers might1150be of interest to them. For me, it ultimately led to a college1151degree and college education, but I still value very much the1152exposure I had to the trades as a vocational student back in1153the 1970s and 1980s, so I agree with you on that.1154    Are there other things we could do that would cause the1155market to work in terms of attracting talented workers, skilled1156workers into these trades?1157    Mr. Baier. I think part of that may be scholarship1158programs. It may be efforts to allow home programs to let1159community colleges or vocational schools actually build1160modulars onsite. We have a number of our community colleges1161that build one to three to five units every year and then1162auction them off. Typically, they bring more at or more than1163what the market value is of those units. So, I think as we1164think about it, we just have to get much more creative and1165invest in those opportunities. I know a lot of my banks then1166partner with those community colleges to offer sort of a first-1167time in-house mortgage to go with that modular home that is1168built at the community college.1169    Mr. Rose. Thank you. I agree with everything you are1170saying.1171    I want to just leave the panel with this thought. I am a1172farmer in a rural area, and my quest in life has been to1173reassemble the original land grant that John and Ann Lancaster1174acquired from the Revolutionary War, and I have succeeded to1175some degree in that, but as I have done so, I have acquired a1176number of farmsteads. So I, like many other larger farmers in1177my community, own a large number of empty houses, and we ought1178to figure out how to encourage and incentivize the owners of1179those abandoned rural houses, how to put them back into the1180housing stock.1181    Thank you, Mr. Chairman. I yield back.1182    Chairman Flood. The gentleman yields back. The gentlewoman1183from Michigan, Ms. Tlaib, is now recognized for 5 minutes.1184    Ms. Tlaib. Thank you so much, Chairman. Thank you all so1185much for being here.1186    While my district is not rural--I love my beautiful city of1187Detroit--it does still face many of the same challenges1188plaguing rural communities, as you know. No matter where you1189live, for example, we all have seen the vulnerability of our1190communities because of climate disasters, from flooding to1191fires to heatwaves. We know the climate crisis is here.1192    In my district, flooding has been chronic, and many of the1193homes, to many of my seasoned residents who do not have the1194fixed income, they do not have the capability of getting the1195basement cleaned up, addressing even the increase like we are1196hearing now more than ever, mold growing in people's homes.1197    In Wayne County, which is the largest county in my1198district, states of emergency have been declared, and I have1199been here since 2019, so 2019, 2021, 2023, disaster as State1200emergencies declared for severe storms and flooding. According1201to FEMA's National Risk Index, Wayne County and Oakland1202County--I have five communities in Oakland County--face risks1203from natural hazards greater than 96 percent of the U.S. census1204tracts. While climate disasters can strike anywhere, research1205has directly tied, though--this is interesting, and I know my1206ranking member would find it interesting--tied the present-day1207climate risks to historic redlining practices. Redline1208communities have suffered from reduced public and private1209investment, which impacts, again, their ability to not have1210like irreparable harm, making them again very much exposed to1211heatwaves and flooding. Similarly, many rural communities have1212suffered from the same disinvestment, as you know, and the lack1213of resources and adaptive capacity.1214    Mr. Lipsetz, can you explain why historically disinvesting1215in communities, rural communities, communities like mine, how1216it has made them even more vulnerable with the climate crisis?1217    Mr. Lipsetz. Congresswoman Tlaib, thank you for your1218question, and I would suggest that urban and rural markets have1219to be intertwined if this Nation's going to work well. It1220undermines our long-term political and economic viability if we1221do not see the interests that we have that are shared across1222that geography.1223    More specific to your question, places like Dearborn,1224Michigan, and others that are threatened by storms, I used to1225work for Congressman John Dingell, so I know a touch about1226Dearborn.1227    Ms. Tlaib. So you know about Aviation Sub, which is that--1228--1229    Mr. Lipsetz. I sure do.1230    Ms. Tlaib [continuing]. beautiful Detroit neighborhood1231right up against Dearborn. Both of them, it was the first time1232I have seen both of the communities coming together and saying1233we have to do something about flooding.1234    Mr. Lipsetz. Yes. It is specifically what I am thinking1235about. For rural communities, when disaster strikes like1236something like there, the unfortunate reality is FEMA is not1237structured to deploy to rural places. If you take the disaster1238in North Carolina where a hurricane thousands of miles away1239wiped out small towns and communities across the hills of North1240Carolina, FEMA's ability to deploy to those areas is shockingly1241poor compared to its disaster responses for large places. That1242is what we do as Federal Government, right? We are big. We come1243in, we plop down our thing, and it is one size fits all.1244    The ability for a Federal agency, if they are going to1245accept the responsibilities for disaster recovery, to be able1246to deploy both its community assistance and its individual1247assistance to these small towns needs a very firm look.1248Otherwise, we are going to leave places outside of major metro1249areas at tremendous risk for flooding.1250    Ms. Tlaib. Yes, Detroit got some of the BRIC funding, the1251Building Resilient Infrastructure Communities program. It was1252really incredibly helpful. It was not a ton. People do not1253realize the $1 million, It is not even a dent into what is1254needed, and my district needs and relies, of course, on that1255Federal partnership.1256    Earlier this year, when we did get the $1 million, there1257was a sense of hope among residents that we were actually going1258to try to address it. Can you speak about how shuttering the1259FEMA and programs like BRIC will impact ability for some of our1260communities? I mentioned redlining earlier, and now I feel like1261we are experiencing blue lining. I know my colleagues do not1262want to hear it, but that is what I am experiencing. I feel1263like even with our community project funding, ours got cut 701264percent. When we were in the majority, we never cut their1265funding because Americans are Americans no matter where they1266live, and the need is the need no matter, again, their1267political affiliation. If you can talk a little bit about,1268again, the BRIC program and why that is important.1269    Mr. Lipsetz. Congresswoman, that is not a program I am1270familiar enough----1271    Ms. Tlaib. That is okay.1272    Mr. Lipsetz [continuing]. to speak to----1273    Ms. Tlaib. I do want to emphasize to my colleagues we1274should stop blue lining. Many of Americans have so many ties to1275each other. I just do not think one community should be hurt1276because of who they voted for.1277    Thank you. I yield.1278    Chairman Flood. The gentlewoman yields back.1279    The gentleman from South Carolina, Mr. Timmons, is now1280recognized for 5 minutes.1281    Mr. Timmons. Thank you, Mr. Chairman, and thank you to the1282witnesses for being here after a crazy week in the Financial1283Services Committee.1284    Rural America is facing a growing housing crisis, but it is1285one we have the tools to fix. One of the clearest barriers to1286new development is the permitting process. Homebuilders back in1287South Carolina tell me that permitting delays alone can add up1288to $60,000 to the cost of building a single home. In rural1289areas, that is often enough to derail a project before it even1290begins. If we are serious about addressing the rural housing1291crisis, streamlining permitting must be a part of the solution.1292    Mr. Garcia, what specific best practices should Congress1293consider promoting to reduce permitting-related costs and1294encourage more private development in rural communities?1295    Mr. Garcia. Thank you, Congressman. I think there are two1296specific things that come to mind. The first is streamlining1297the requirements for specific Federal programs that provide1298critical funding for affordable housing. I think, as we heard1299earlier, many of the requirements, while well-intended, can add1300significant costs through an extended project timeline, so that1301is a critical piece, too.1302    I think also providing resources for localities to1303streamline their own permitting process is really critical. We1304have a lot of municipalities that would really like to1305undertake the work of reforming the way that they plan and1306approve for housing, but they do not have the resources to do1307that, and I think that is particularly true in rural1308communities where the planning capacity is not like in larger1309cities.1310    Mr. Timmons. A lot of municipalities are trying to1311encourage affordable housing, but they are kind of doing it1312through a patchwork framework that creates uncertainty. When1313you do not know what the rules are and you start a project and1314they keep moving the goalposts, it is problematic.1315    I guess my question is, we have the National Flood1316Insurance Plan, which creates a framework through which people1317can create some sort of expectations. Do you think it would be1318helpful to have something similar, a menu of options that1319municipalities and local governments could use to try to create1320that best practice and create more certainty for potential1321developers?1322    Mr. Garcia. Yes, I think that would be extremely helpful.1323Uncertainty is a huge barrier to development in any community,1324and to the extent a community can make the rules clear and1325precise up front, that will be a big help for getting more1326housing built.1327    Mr. Timmons. Thank you for that. To you, Mr. Maute, in your1328experience working with rural communities, how does permitting1329delays or regulatory complexity affect your ability to get new1330housing projects off the ground?1331    Mr. Maute. Thank you for the question. Yes, permitting1332delays, local approvals, whether it is water, sewer, tap fees,1333add a lot of uncertainty. Sometimes the goalpost is moved where1334we are anticipating one set of fees, one set of review process,1335and we go to submit our plans, our specs, and move through it,1336and it changes. So, it does create a lot of delays, a lot of1337problems, and it is mostly all tied to uncertainty, as Mr.1338Garcia stated. Knowing what something is going to be when we go1339in is paramount to our success and working with municipalities1340that understand that would also be extremely helpful.1341    Mr. Timmons. Our country has seen an incredible opportunity1342using telehealth to reach rural communities that do not have1343access to good doctors. Is there a world in which we could use1344tele-inspections to streamline the permitting process, to1345streamline the inspection process? I am not saying it would1346work in every circumstance, but after maybe a year of in-person1347inspections where the contractor and the subcontractor were1348able to show that they were competent, is there a world in1349which we could transition to predominantly using videos and1350submitting them to reduce travel time of inspectors and just1351streamline these processes? Mr. Maute, is that something that1352you think would work?1353    Mr. Maute. Yes, I do think that would work, and we are1354seeing it work. Following the pandemic, a lot of inspections1355went from being in person to being virtual, whether it was1356submitting videos, to as simple as someone carrying their phone1357and FaceTiming or Skyping with folks to show them the work that1358had been done. Those inspections, those review processes were1359just as efficient, if not more, than the in-person inspections.1360I do not think anything was lost when we did that and are1361continuing to do that.1362    Mr. Timmons. If somebody was incentivized to create a1363really good video that would cut down on travel time and allow1364someone to basically spend 15, 20 minutes, whereas a personal1365inspection would take hours. I just feel like that is a really1366easy, streamlined, cost-saving mechanism and delays, time is1367money, and if we could streamline that portion, I think it1368would be a step in the right direction.1369    I am out of time. I thank the witnesses for being here1370today. With that, Mr. Chairman, I yield back.1371    Chairman Flood. The gentleman yields back.1372    The gentleman from Wisconsin, Mr. Fitzgerald, is now1373recognized for 5 minutes.1374    Mr. Fitzgerald. Thank you, Chairman.1375    Obviously, you are well aware we have a situation where1376there are just many young adults who cannot afford a down1377payment on a home, and builders are not necessarily1378incentivized to create enough starter homes or entry-level1379homes for younger generations to begin to build wealth. Instead1380of the Federal Government being the answer to everything, I1381know there are some attempts at the local level, and I would1382love to hear if you are aware of some of those.1383    The example I continue to cite is the Next Generation1384Housing Initiative. It is in Washington County, which is in my1385district in Wisconsin. It is a locally driven effort to expand1386affordable home ownership for middle-income families by1387developing about 1,000 units of new owner-occupied homes by13882032. This is real. This is really happening right now. It was1389backed by $10 million, which was a county investment. The1390program provided infrastructure subsidies to developers and1391down payment assistance to buyers, up to $20,000 per home. What1392it does is it sets kind of a clear affordability target. It1393requires that 40 percent of the homes be sold under $340,000,1394and all of them have to be under $420,000, all right? So, I1395think there are some things we could do at the Federal level to1396assist some of these types of programs to reduce development1397costs and expand housing options. The initiative also promotes1398zoning reforms, which talk to any Wisconsin home builder right1399now, is a big part. We talked a little bit about the1400underground and everything, all the prep that needs to be done1401before a lot is ready to go and then a public-private advisory1402group that oversees the effort.1403    There are some other options, too. There is some1404volunteerism that young couples can get engaged in if they want1405to earn some of those credits.1406    I think, Mr. Maute, have you heard of any of these types of1407programs? Are you aware of anything that is being done at the1408local level that is similar to this?1409    Mr. Maute. Where I work, we focus solely on multifamily, so1410I am not as familiar with some of the single-family programs.1411There are some States we operate in that will have a single-1412family State housing credit that folks can use. As far as on my1413day-to-day in utilizing those programs, I have not.1414    Mr. Fitzgerald. Yes. Mr. Garcia, are you aware of anything?1415I know there was some stuff--the last time we had a hearing, I1416think it was in mid-May, there was some discussion about a1417program in Colorado that is very similar in some smaller1418mountainous towns I know.1419    Mr. Garcia. I think there are a couple examples, both at1420the State level and the local level, where you have assistance1421for first-time homebuyers or just homebuyers in general.1422California has a statewide program called Dream for All. I1423think it is wildly oversubscribed, which tells you about the1424need for something like down payment assistance, and I think1425there is something to that.1426    I think the challenge is, without a commensurate increase1427in housing supply, you are not necessarily going to drive the1428cost of the housing down, so the down payment assistance is1429useful. We also need to think about, okay, we need to increase1430housing supply overall.1431    So, to your point about no incentive to build, say, starter1432homes, this is where a lot of the zoning reform, land use1433regulation changes come into play. Where you zone and plan for1434smaller starter homes that we used to build pretty routinely.1435Those are the kinds of things that if we can get the market1436working right to provide those, those are going to be naturally1437more attainable than the kind of larger homes that we see going1438for kind of exorbitant prices today.1439    Mr. Fitzgerald. Right. Density should be our friend in many1440of these projects, right? Not everybody can have a three-1441bedroom, two-bathroom home. A lot of what is needed are these1442starter-type homes.1443    I was just going to ask, Mr. Baier, do you see a role for--1444and have you experienced in the banking industry a role for1445financial institutions on this front?1446    Mr. Baier. I appreciate the question. As I begin to think1447about my State, we are seeing partnerships. To your point,1448volume is really where we are at in terms of keeping costs down1449and providing the supply of homes. We currently, under our1450Rural Workforce Housing Program, have four different towns that1451have literally contracted with one townhouse developer because1452there was not enough demand in one community. They are then1453literally pooling their resources and saying, my community will1454guarantee 12, my community will guarantee 20, and this1455developer now is ready to embrace 40 to 60 townhomes in a very1456rural area. So, we think that volume is important. Our banks1457are coupling that with, again, low-interest loans or first-time1458homebuyer loans as part of that process.1459    I applaud the work that you have done with the Access to1460Credit for our Rural Economy (ACRE) Act, which would, again,1461provide another tool----1462    Mr. Fitzgerald. Yes.1463    Mr. Baier [continuing]. to help with lower-cost mortgages.1464I think there are a lot of opportunities out there to build1465volume and keep costs down.1466    Mr. Fitzgerald. Thank you for being here. I yield back.1467    Chairman Flood. Thank you. The gentleman yields back.1468    The gentlewoman from Massachusetts, Ms. Pressley, is now1469recognized for 5 minutes.1470    Ms. Pressley. Thank you, Chairman Flood and Ranking Member1471Cleaver, for this truly critical hearing.1472    As I have said many times before, housing is the number one1473issue I hear about from my constituents in the Massachusetts14747th, and I am sure it is the same for all of my colleagues1475representing rural districts. Urban and rural housing issues,1476urban and rural housing issues are not opposites and not1477totally different.1478    When we talk about rural housing, we cannot ignore the1479ripple effects of public health crises such as the opioid1480epidemic and how they intersect with housing insecurity and1481incarceration. To illustrate this point, let me tell you two1482stories that on the surface may look different, but at their1483core are remarkably similar.1484    A story not uncommon in major cities is that of Emiliano,1485who lived in public housing his entire life, but after he1486served time for a nonviolent drug offense, he was barred from1487returning home. Unable to find employment due to his record, he1488started his own business and began the difficult journey of1489rebuilding his life but every time he applied for housing, his1490record shut the door in his face. Despite doing everything1491right, he lacked stable housing and has to stay with different1492relatives couch-surfing. He served his punishment, but he was1493still being penalized for no legitimate reason.1494    In rural districts, there are stories like Maria, a mother1495of two who became addicted to opioids after a workplace injury.1496She was convicted for a possession charge and never served time1497but in her small town, there are only a few landlords, and they1498use third-party screening services that automatically flag1499anyone with a record. Like Emiliano, she was shut out before1500she even got a fair chance. With no place to go, her kids were1501placed into foster care, and she had to live in her car trying1502to fight addiction while rebuilding from nothing.1503    These stories, one urban, one rural, are playing out all1504over the country. The opioid crisis, mass incarceration crisis,1505and the housing crisis are not separate issues. They are deeply1506connected. This is why I introduced the Housing First Act to1507ensure old or irrelevant criminal records do not deny people1508who are trying to reenter society and rebuild their lives to1509provide them with ability to access housing.1510    Mr. Lipsetz, in your view, would improving access to1511housing for people with criminal records, including those1512recovering from opioid addiction, reduce recidivism and improve1513community stability?1514    Mr. Lipsetz. Thank you for your question, Congresswoman. At1515the beginning of this hearing, Chairman Flood gave a perfect1516description of how housers like us sitting here do not need to1517be in the business of who is moving into the unit. We need to1518provide excellent units, high quality, and if they are coming1519in with a record of having served time or other issues, that is1520not our business. That is overregulation and overreach by the1521Federal Government. We need to be able to equally house folks1522who are coming into our front doors without asking us, as the1523owners or financiers of these properties, anything about that1524personal record.1525    I would gladly house the families that you are talking1526about in the units we work with, and we are able to as a CDFI1527unless there are other public moneys in the property. That is1528not my business. I am a houser, and every single American who1529knocks on the front door, who needs a place to live, that is my1530job.1531    Ms. Pressley. Thank you. Mr. Lipsetz, have you seen models1532of public housing agencies or nonprofits partnering with1533treatment or reentry programs to implement this kind of1534supportive housing approach?1535    Mr. Lipsetz. Yes, not for my current work, but for a1536previous employer. I did see Oakland Housing Authority1537partnering with its county to do reentry programs, being able1538to set aside some of its Section 9 public housing units for1539that use specifically. It was an extraordinarily well-received1540program in the city of Oakland and functional for the families1541that had someone coming back, a head of household who had been1542incarcerated, to reunite with children. It is not a rural1543story----1544    Ms. Pressley. Thank you.1545    Mr. Lipsetz [continuing]. I am telling you.1546    Ms. Pressley. Thank you. Thank you very much. So the point1547is, if we do not make safe and affordable housing accessible to1548people who are trying to get back on their feet, overcome their1549drug addiction, and just provide for their families, we are1550just reinforcing the cycle of homelessness and incarceration.1551Sam agrees.1552    My Housing First Act offers a pathway to treat people with1553dignity and to break this vicious cycle in urban, suburban, and1554rural communities.1555    Thank you, and I yield back.1556    Ms. De La Cruz [presiding]. Thank you. Hello, good1557afternoon. I would like to recognize myself, Congresswoman1558Monica de la Cruz.1559    I have the honor of representing a rural district in deep1560south Texas on the border, McAllen. Housing is something of1561great importance, not only because it is a rural community, but1562also because of the economic challenges that we have down1563there. I am committed to finding affordable housing solutions1564for the people in my district and really for across the1565country.1566    South Texas is seeing innovative building solutions. As you1567know, the population of Texas is increasing by leaps and1568bounds, and so we are looking for low-cost solutions. There is1569a Starbucks locally that has opened a 3D-printed building, a15703D-printed Starbucks. It is a low-cost modular. Low-cost1571modular homes are being constructed in rural areas by1572nonprofits, ``come dream. come build'' in partnership with1573multiple U.S. banks. There is the largest 3D neighborhood1574nearing completion in the State of Texas. These are innovative1575solutions to our building and housing challenges.1576    My question is for Mr. Garcia. What do you see as the1577largest obstacle private companies face when seeking to deliver1578low-cost, innovative housing solutions like modular or 3D-1579printed homes to our rural communities?1580    Mr. Garcia. Thank you for the question, Congresswoman.1581There are a few challenges that offsite or industrialized1582construction builders face. The first is that many times local1583rules or regulations do not allow for that kind of housing to1584be sited in specific neighborhoods. So, you may have a zoning1585regulation that forbids any type of manufactured housing that1586may be rooted in kind of an outdated view of what manufactured1587housing really is or looks like.1588    Ms. De La Cruz. Those would be local policies, correct?1589    Mr. Garcia. Those are local, yes. We mentioned this1590earlier, but there are some outdated rules at HUD that we1591should be examining and revising as well. There is mention of1592the permanent steel chassis rule. If we were to remove that, it1593would reduce costs and time to build manufactured housing1594pretty significantly and, particularly in places where you have1595a high cost of housing, those kinds of changes can be really1596impactful to bring more affordable housing.1597    Ms. De La Cruz. For the American public that is listening1598right now, what is the chassis rule?1599    Mr. Garcia. So the chassis rule is essentially a rule by1600HUD that says that any home that is manufactured needs to have1601a steel chassis to be permanently--or if it is not going to be1602permanently affixed, so that it can be moved, even though the1603vast majority of manufactured homes never move once they are1604sited. So, we have an unnecessary amount of extra materials1605that go into a manufactured home that really do not need to be1606there.1607    Ms. De La Cruz. What is the percentage of manufactured1608homes that actually move?1609    Mr. Garcia. I think it is pretty low. I do not have a1610statistic off the top of my head, but it is shockingly low.1611    Ms. De La Cruz. Thank you. We need to continue to innovate1612and find solutions to the challenges that our rural housing1613communities are facing. Data from the National Association of1614Realtors shows we are only building one new home for every two1615new jobs created nationally and this ratio is often worse in1616rural communities. Meanwhile, rural housing development faces1617unique infrastructure challenges, including inadequate roads,1618utilities, and broadband access, plus higher per-unit1619construction costs due to smaller project scales.1620    Mr. Garcia, again, what specific Federal programs or policy1621changes would you recommend to make rural housing construction1622economically viable for developers?1623    Mr. Garcia. Thank you for the question. I think to make1624more projects economically viable; we really just need to look1625at the cost of construction. As we noted earlier, costs of1626construction are high across the country, but are particularly,1627I would say, harmful in rural communities where it costs more1628to bring materials to the sites, it costs more to source labor1629and contractors. So, anything we can do to bring down materials1630and labor costs is going to be really important to making those1631projects work better.1632    Ms. De La Cruz. Thank you. I yield back.1633    I now recognize the gentleman from Montana. Mr. Downing is1634now recognized for 5 minutes.1635    Mr. Downing. Thank you, Madam Chair, and I thank the1636chairman for putting this together. I really appreciate the1637constructive dialog today on barriers to rural housing1638development.1639    Just a couple of stats. Montana's 2nd Congressional1640District that I represent is the largest by land mass after1641Alaska, so we have a lot of dirt and a lot of long roads. A1642couple of things I have talked about in this committee, in the1643past, but I really think about the path to ownership being that1644fundamental part of the American dream, and I think of the1645limiting factors there. I talk to folks about the small amount1646of increase in building a home and how many potential buyers1647that even a small, modest increase price out of the market and1648how important that is.1649    Something that really sticks in my mind is the 24 percent1650of the current average single-family home sale price is from1651regulations across all levels of government, so things that I1652think about.1653    I am going to shift gears here for a second because I would1654like to focus my initial questions on communities that are1655frequently left out of these discussions, and those are tribal1656communities. Montana is home to seven federally recognized1657Indian reservations, and each one plays a critical role to the1658local community and culture. Native American residents in1659Montana, especially those living on reservations, experience1660significantly lower homeownerships, up to 12 percent lower than1661Montana's overall population.1662    I am going to start with Mr. Garcia. Can you describe the1663unique challenges that Native Americans face when it comes to1664homeownership?1665    Mr. Garcia. Thank you for the question, Congressman.1666    Some of the unique challenges include pretty significant1667rates of poverty. When you have that kind of impoverishment in1668any community, it is going to be difficult for them to not just1669pay the rent but save any sort of money to make a down payment1670and build wealth.1671    I think the other challenge that they can face is just1672access to credit and financing sources. It is just not1673available to the tribal communities like they are to the1674broader public.1675    Mr. Downing. Thank you. Mr. Lipsetz, do you have anything1676to add to that?1677    Mr. Lipsetz. Thank you, Congressman. Yes, we have actually1678worked with the Northern Cheyenne Tribe in your district quite1679a bit, and it is access to credit. It is not just the1680regulatory costs that you were mentioning, 24 percent, which I1681think everybody here finds a challenge with that, but the cost1682of capital delivered to the reservation without a well-1683structured banking environment, or a lot of financial services1684is going to cost the individual family more.1685    One of the few ways that I have seen that addressed well is1686there is a very strong network of native CDFIs that can de-risk1687that lending for private organizations. They are not trying to1688grab market share. They are bringing in a portion of the cost1689of the house to bring it down for the private lender, and being1690able to fund those native CDFIs is a not-small piece of the1691puzzle.1692    Mr. Downing. Thank you. Back to Mr. Garcia. What1693combination of Federal housing assistance and technical support1694can help rural native communities leverage private sector1695investments?1696    Mr. Garcia. I do not know if I have a good answer to that1697question. I would defer back to some of my colleagues on that.1698    Mr. Downing. Mr. Lipsetz?1699    Mr. Lipsetz. I am sorry, sir. Could you repeat the1700question?1701    Mr. Downing. What combination of Federal housing assistance1702and technical support can help rural native communities1703leverage private sector investments?1704    Mr. Lipsetz. As housers, it is the hardest part of the1705portfolio to support. Native housing on reservation is1706extraordinarily expensive and challenging. There is a piece in1707the Rural Housing Service Reform Act sponsored by Senator1708Rounds and Senator Smith, a bipartisan piece of legislation1709that would take USDA's 502 Direct program, take a portion of1710the funding for that, and lend it to the tribe. The tribe1711itself then can make the loan to the individual household on1712the ground, and they have done this successfully in a1713demonstration program.1714    If RHS Reform Act moves, I strongly recommend that being1715one of the principles in there because folks like Northern1716Cheyenne and others can actually then access a loan from a1717trusted lender on reservation.1718    Mr. Downing. Thank you. In my last seconds here, I am going1719to switch gears to housing more generally. I will go to Mr.1720Baier. What role can public-private partnerships play in1721addressing rural housing shortages? What are some effective1722models you have seen that align private capital with local or1723regional development goals?1724    Mr. Baier. Great. Thank you for the question. I think a lot1725of it, first and foremost, is on lot development, making sure1726we have a place to place homes in terms of public-private1727partnerships, and then also developing those partnerships1728between local developers and the various tools we have talked1729about at the State level and eliminating friction that exists1730because right now, it is almost impossible because of the1731friction to make them doable.1732    Mr. Downing. Right. Thank you. Unfortunately, I have run1733out of time, so Madam Chair, I yield.1734    Ms. De La Cruz. Thank you. The gentlewoman from Colorado,1735Ms. Pettersen, is now recognized for 5 minutes.1736    Ms. Pettersen. Thank you, Madam Chairwoman, and thank you1737to everybody for being here today. My name is Brittany1738Pettersen. I represent Colorado's 7th congressional District.1739This is Sam. Hopefully, he will be good throughout this1740testimony.1741    I really appreciate the conversation on an issue that is so1742important to my State, to all of us across the country. In1743Colorado, we are dealing with unique challenges as we have seen1744climate continue to increase costs for insurance and because of1745the climate disasters that have been coming throughout1746Colorado, increased wildfires and hail. This is Davis. He is1747not being as good as the baby here, buddy.1748    Our State is being hit with not just an undersupply of1749housing but also the rising insurance costs. We have seen that1750some people are unable to get insurance at all. Right now, we1751are actually 100,000 homes short of what is needed, and the1752premiums for insurance are nearly up 60 percent. The number one1753driver is from hail damage. So we know we are seeing this1754crisis across the country, and nationally, prices have surged1755nearly 50 percent, and rent is up over 25 percent over the last17565 years.1757    Unfortunately, instead of actually addressing these1758challenges, the Trump Administration has delayed housing1759funding, undermined the agency's task with housing assistance,1760and the President has proposed slashing housing investments1761across the country. This would be devastating to Colorado and1762our urban communities, but also especially our rural1763communities. We have also seen an increase in costs because of1764the instability with tariffs and the rising costs there as1765well.1766    So, Mr. Lipsetz, as we have seen more extreme climate-1767driven natural disasters across the country, and unfortunately,1768the move to eliminate the BRIC program, which invests in pre-1769disaster mitigation and strengthens our resiliency. Since I led1770a letter opposing this and demanding an answer and still have1771not received anything from the administration on their move to1772do this, can you please answer, to take a stab at it since we1773have not heard back, and what opportunities the BRIC program1774provided and how important it is?1775    Mr. Lipsetz. As I said to your colleague from Michigan just1776a bit ago, the BRIC program is not something I have expertise1777in. It is not a program I know well. I know that most of the1778work we do at the Federal level, we do not have a lot of1779regulatory control over insurance and insurance costs, but that1780the borrowers that we work with are facing much higher1781increases than you just described because it is mostly in the1782multifamily sector facing significant costs from that.1783    Our effort at the Federal level has been more for1784resiliency. We have called for better per-unit funding for1785programs so that we can get ahead of disaster, so that we can1786make the homes more resilient and be able to work with the1787insurance companies to bring that cost down. BRIC is, again,1788not a program I know well.1789    Ms. Pettersen. Thank you for answering that. I know it is1790important when we look at building resiliency and how we are1791building new types of homes and thinking about things1792differently with climate change. The Trump Administration's1793budget proposal eliminates a majority of rural housing1794programs, including Section 502, the single-family direct1795loans, the Section 523 mutual and self-help housing grants, and1796the 523 land development loans, which is alarming to me when I1797think about the challenges some of my mountain communities are1798facing when we have seen an increase in people moving there as1799they are able to work remotely and people who have lived there1800their entire lives being unable to stay in their communities.1801So, can you speak on the effectiveness of these housing1802programs and the impacts to our rural communities?1803    Mr. Lipsetz. I would love to. The proposal in the1804President's budget would be devastating for rural communities.1805To zero out the programs that are funding some of the only1806development happening in those towns would be an unconscionable1807move for those folks.1808    I have to commend the House and the leadership in the House1809now of the mark that you guys put together for the budget of1810restoring some of those programs, so thank you very much.1811Breathe a small sigh of relief. Hopefully, we are not talking1812about zeroing out some of the only production and preservation1813programs that Colorado families and others are depending on.1814    Specific to the 502 Direct program, this is an1815extraordinarily effective program where you are taking families1816at some of the lowest credit score levels with modest income,1817putting them into home ownership for only about $9,000 per unit1818for a lifetime. It is an important program.1819    Ms. De La Cruz. Time has expired.1820    Ms. Pettersen. Oh, thank you, Madam Chairwoman, and thank1821you for your comments.1822    Ms. De La Cruz. The chair now recognizes the gentleman from1823Iowa. Mr. Nunn is recognized for 5 minutes.1824    Mr. Nunn. Thank you very much, Madam Chairwoman, for1825holding this, and thank you very much for the panel being here1826talking on a very important issue, affordable housing,1827particularly rural affordable housing in places like Iowa.1828    Iowa, like much of America, faces a growing affordable1829housing crisis. Nearly 40 percent of Iowans spend at least 1/31830of their overall take-home salary just on being able to afford1831a place to live, and it is not that expensive, my friends, in1832Iowa.1833    Our rural communities are already grappling with population1834decline and economic strain, risk of losing the very housing1835that keeps seniors, families, working Iowans, farmers rooted in1836our most rural communities. My constituents are not asking for1837a handout. Let us be clear. They are asking for a fair chance1838to live where their parents and their grandparents worked,1839where they worshipped, where they started a new life.1840    Modernizing USDA's delivery system, expanding loan terms1841from 2 to 5 years, and allowing funding for site development1842activities like surveying and design, these reforms do not1843represent radical ideas, they represent common sense. They help1844us root out fraud, and they advance meaningful reform. We1845recognize this common sense in Iowa, which is why I have worked1846with my friend across the aisle, Ranking Member Cleaver here,1847on delivering bipartisan reforms to USDA's rural housing1848program.1849    Mr. Lipsetz, I am going to turn to you. I know you are the1850Democrats' witness, but I think we are looking for1851comprehensive bipartisan solutions here. One of the programs we1852are reviewing is Section 515, which just happens to be the area1853code for rural Iowa and Des Moines. A program that Iowa adopted1854earlier, today the State manages about 180 properties and more1855than 3,600 apartment units under this program. These properties1856provide critical housing in towns where no other affordable1857housing option exists, but we are losing them, and we are1858losing them quickly. When you work with many of these1859properties that you are working with today, what challenges do1860you see in recapitalizing them?1861    Mr. Lipsetz. Thank you for your question, Congressman. I1862think, as you may have heard throughout this hearing, you would1863be hard-pressed to pick a Democratic or Republican witness out.1864It might have been who invited us, but there has been an1865extraordinary amount of continuity across, in the same way that1866your work with Congressman Cleaver represents the Strategy and1867Investment in the Rural Housing Preservation Act. It lays out1868an authorization for programs that are needed for that1869capitalization. You are authorizing $200 million a year for the1870Multi-Family Housing Preservation and Revitalization (MPR)1871program at USDA, which would do exactly what you just called1872for.1873    If we gain the support of the rest of the members around,1874that bill also does one of the most fundamental elements you1875could do for the multifamily housing programs at USDA, which is1876to decouple rental assistance from the mortgage. The moment you1877pay your last mortgage payment, you have lost your ability to1878get that very modest subsidy to continue to house folks who are1879in the building today, decouple the two, allow for the rental1880assistance to continue, and you have helped a small business1881person in Iowa or someone else whose business just happens to1882be owning property and renting it out to continue to work.1883    Without that reform, the 380,000 units that remain are gone1884in 20 years. My organization has done that analysis. Two years1885from now, 2027, the rate of decline of the program is going to1886skyrocket. It is crisis time. Like we need action on that, and1887a lot of it shows up in the Strategy and Investment in Rural1888Housing Preservation Act that you have been involved with, and1889I am thrilled to see you pushing that agenda.1890    Mr. Nunn. Mr. Lipsetz, thank you, and I think you are1891absolutely right. This is a crisis we can avert if we start1892working on it today. Again, I want to say thank you to the1893bipartisan effort on this.1894    Mr. Maute, I will turn to you, the work that you have done1895as well. One of the challenges that I think we have noted here1896is outdated technology and limited USDA staffing undermining1897the government's ability to track compliance, waste, fraud, and1898abuse, and then USDA becomes a roadblock for a lot of this1899rather than an aid. Could you talk to us a little bit about1900what we could do to help fix the USDA challenges?1901    Mr. Maute. Absolutely. Thank you for the question. So yes,1902RD is full of great people and great staff that care a lot1903about what they do. They are certainly hampered by their1904outdated technology. Their information technology (IT) is, no1905exaggeration, 35 to 40 years behind. Us as borrowers and owners1906cannot simply go on and look at a loan balance. We have to1907contact someone to do that for us. So one, investments in IT,1908investments in staff and training would go a long way to speed1909up the approval processes that we need to develop the housing1910that we build.1911    At CARH, we met with both USDA and HUD staff early this1912year and presented memos to them on ways to improve their1913procedures and their work that they do, and we have submitted1914those to the committee for review.1915    Mr. Nunn. Thank you very much. This is coming directly from1916my homeowners, my property builders in Iowa, as well as those1917who want to rent. Let us have it stronger going forward.1918    Thank you, Madam Chair, for the opportunity to join.1919    Ms. De La Cruz. The gentlewoman from Oregon is now1920recognized, Ms. Bynum, for 5 minutes.1921    Ms. Bynum. Thank you, Madam Chair.1922    USDA Rural Housing Service and Federal Housing1923Administration programs serve as crucial lifelines for1924homeownership in rural America, and rural communities face1925unique challenges with limited access to credit, which1926restricts funding options for potential homebuyers. These1927Federal programs also provide affordable financing options that1928would not otherwise exist in many rural communities, and I1929believe that we should look to find ways to strengthen these1930programs and not cut them so that they are reaching more1931families.1932    My question is for Mr. Lipsetz. What specific improvements1933to USDA Rural Housing Service and Fair Housing Administration1934(FHA) programs would you recommend to better serve rural1935homebuyers and how can we streamline these programs to make1936them more accessible while ensuring they are adequately funded1937and staffed to meet growing demand in underserved rural1938markets?1939    Mr. Lipsetz. Congresswoman, thank you for the question.1940Very specifically, extend the loan terms of the 502 loan up to194140 years to help more households qualify. Allow USDA to release1942502 borrowers from liability when their loan is assumed or1943transferred to a new borrower. Clarify for them that homeowners1944with a Section 502 loan can operate in-home childcare centers1945and the other things which are very common in rural places. We1946use our homes for many things, including our small businesses.1947Allow for properties with existing Accessory Dwelling Units1948(ADUs) to be eligible also for the 502 Guarantee Program.1949    These are all common sense, bipartisan reforms that we just1950talked about, the Strategy and Investment in Rural Housing1951Preservation Act, which your ranking member and colleague have1952supported. There is a Rural Housing Service Reform Act, which1953takes all of those principles and expands it to include the1954things I just listed for USDA's single-family housing programs.1955This is often the only loan that is happening for rural1956homeowners to be able to use in some of these towns. Take those1957away, and we are going to significantly reduce the number of1958homeowners in small towns building generational wealth and1959housing their families in a decent manner.1960    Ms. Bynum. Thank you. Also, my second question, Mr.1961Lipsetz, is President Trump's proposed budget cuts to the USDA1962by $7 billion and the Department of Housing and Urban1963Development by $33 billion, do you think that this will make1964these programs more effective at helping to lower the cost of1965housing or less?1966    Mr. Lipsetz. Thank you for your question. Far less. What we1967do as rural housing folks is we are seeding local economies1968with housing preservation and production that allows the1969private market to grow. These are places where the private1970market is not functioning well and needs a bit of gas in the1971tank through CDFIs, through the programs at USDA and HUD. If1972you can get that dollar to a local community, the members in1973CARH, who sits next to me, can take those and use them as1974private owners to continue to develop. Right now, the level of1975dysfunction in some of these local economies is not allowing1976them to move forward.1977    If you take that little--little, by the prospect of the1978whole Federal Government--if you take that little bit of1979subsidy out, you are never going to build a private market to1980function there, and you are certainly not going to house the1981folks who are there today who need it right now.1982    Ms. Bynum. So, do you expect rural homebuyers would be1983benefited by cuts to programs designed to address rural housing1984affordability issues?1985    Mr. Lipsetz. Certainly not, and I commend the House on1986their mark of having restored many of those programs compared1987to the President's budget. It was a bold move on your part and1988much appreciated from a small-town perspective.1989    Ms. Bynum. Thank you. I think, Madam Chair, it is critical1990that we use our responsibility as members sitting on this1991committee to examine the root causes of why fewer and fewer1992people, especially younger Americans and people in rural areas,1993believe that the path to homeownership is becoming1994unattainable. I think everyone on this committee can agree that1995we are going through a housing crisis in this country. When the1996cost of building and buying a home is at record highs, we1997should be bolstering homeownership and homebuilding programs,1998not cutting them. So, let us make owning a home an attainable1999goal for all Americans.2000    Thank you, Madam Chair. I yield back.2001    Ms. De La Cruz. I would like to thank all the witnesses for2002their testimony today.2003    Without objection, all members will have five legislative2004days to submit additional written requests for the witnesses to2005the chair. The questions will be forwarded to the witnesses for2006their response. Witnesses, please respond no later than July200717, 2025.20082009    [The information referred to can be found in the appendix.]20102011    This hearing is now adjourned.20122013    [Whereupon, at 3:12 p.m., the subcommittee was adjourned.]20142015                               APPENDIX20162017                              ----------20182019                   MATERIALS SUBMITTED FOR THE RECORD2020[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]20212022                                [all]