Building a Solid Foundation: Restoring Trust and Transparency in Public Housing Agencies

1[House Hearing, 119 Congress]2[From the U.S. Government Publishing Office]34                      BUILDING A SOLID FOUNDATION:5                    RESTORING TRUST AND TRANSPARENCY6                       IN PUBLIC HOUSING AGENCIES7=======================================================================89                                HEARING1011                               BEFORE THE1213                       SUBCOMMITTEE ON OVERSIGHT AND14                                INVESTIGATIONS1516                                 OF THE1718                    COMMITTEE ON FINANCIAL SERVICES19                     U.S. HOUSE OF REPRESENTATIVES2021                    ONE HUNDRED NINETEENTH CONGRESS2223                             SECOND SESSION2425                               __________2627                           FEBRUARY 10, 20262829                               __________3031                           Serial No. 119-573233       Printed for the use of the Committee on Financial Services3435[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]3637                            www.govinfo.gov3839                               __________4041                    U.S. GOVERNMENT PUBLISHING OFFICE4263-964 PDF                 WASHINGTON : 202643=======================================================================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 OVERSIGHT AND INVESTIGATIONS8687                 DANIEL MEUSER, Pennsylvania, Chairman8889TIM MOORE, North Carolina, Vice      AL GREEN, Texas, Ranking Member90    Chairman                         RASHIDA TLAIB, Michigan91ANN WAGNER, Missouri                 NIKEMA WILLIAMS, Georgia92BARRY LOUDERMILK, Georgia            CLEO FIELDS, Louisiana93ANDREW R. GARBARINO, New York        SAM LICCARDO, California94ANDREW OGLES, Tennessee95MIKE HARIDOPOLOS, Florida9697                        C  O  N  T  E  N  T  S9899                              ----------100101                       Tuesday, February 10, 2026102                           OPENING STATMENTS103104                                                                   Page105Hon. Dan Meuser, Chairman of the Subcommittee on Oversight and106  Investigations, a U.S. Representative from Pennsylvania........     1107Hon. Al Green, Ranking Member of the Subcommittee on Oversight108  and Investigations, a U.S. Representative from Texas...........     3109110                               WITNESSES111112Mr. Bart M. Schwartz, Co-founder & Chairman, Guidepost Solutions.     5113    Prepared Statement...........................................     7114Mr. Chase M. Haller, Deputy Attorney General and Section Chief,115  Homeowners Protection Unit, Office of the Indiana Attorney116  General........................................................    14117    Prepared Statement...........................................    16118Mr. Milan M. Ozdinec, President Vargas Premier Corporation119  Consultants....................................................    45120    Prepared Statement...........................................    47121Mr. Eric Oberdorfer, Director, Policy and Legislative Affairs,122  National Association of Housing and Redevelopment Officials123  (NAHRO)........................................................    49124    Prepared Statement...........................................    51125126                                APPENDIX127128                   MATERIALS SUBMITTED FOR THE RECORD129130Mr. Bart M. Schwartz:131    Response to Question from Representative Mike Flood..........    84132    Additional Remarks...........................................    86133134                 RESPONSES TO QUESTIONS FOR THE RECORD135136Written responses to questions for the record from Representative137  Maria Salazar138    Mr. Milan M. Ozdinec.........................................    97139    Mr. Eric Oberdorfer..........................................    99140141                      BUILDING A SOLID FOUNDATION:142                    RESTORING TRUST AND TRANSPARENCY143                       IN PUBLIC HOUSING AGENCIES144145                              ----------146147                       Tuesday, February 10, 2026148149             U.S. House of Representatives,150      Subcommittee on Oversight and Investigations,151                           Committee on Financial Services,152                                                    Washington, DC.153154    The subcommittee met, pursuant to notice, at 2:06 p.m., in155room 2128, Rayburn House Office Building, Hon. Dan Meuser156[chairman of the subcommittee] presiding.157    Present: Representatives Meuser, Wagner, Loudermilk,158Garbarino, Haridopolos, Hill, Flood, Green, Tlaib, Williams of159Georgia, Fields, Liccardo, Torres, and Waters.160    Chairman Meuser. The Subcommittee on Oversight and161Investigations will come to order. Jumped the gavel a little162bit there. Without objection, the chair is authorized to163declare a recess of the committee at any time.164    This hearing is titled, ``Building a Solid Foundation,165Restoring Trust and Transparency in Public Housing Agencies.''166    Without Objection all members will have 5 legislative days167within which to submit extraneous materials to the chair for168inclusion in the record.169    As Chairman I now recognize myself for 4 minutes for an170opening statement.171172     OPENING STATEMENT OF HON. DAN MEUSER, CHAIRMAN OF THE173     SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS, A U.S.174                REPRESENTATIVE FROM PENNSYLVANIA175176    Public housing agencies, PHAs, administer Housing and Urban177Development's (HUD's). Combined, these programs account for178roughly $40 billion in Federal funding annually and serve179approximately 9 million Americans through more than 3,300180housing authorities nationwide.181    Secretary Bessent recently estimated 10 percent of taxpayer182funds are lost to fraud, Government Accountability Office (GAO)183published a report that another 10 percent of government184payments are improper, and HUD identified 10 percent of PHAs185fail physical inspections.186    So that could be as high as 25 to 30 percent of the $40187billion that is misappropriated. This is the scale of taxpayer188exposure we are discussing today.189    Yet, despite the level of funding, oversight failures,190corruption, and financial mismanagement we continue to see191surface across the country. For example, in November 2025,192Federal prosecutors convicted 70 employees and contractors at193the New York City Housing Authority for accepting cash bribes194in exchange for no-bid contracts.195    In Atlanta, in 2023, a senior housing authority executive196was indicted for falsifying eligibility data to secure197subsidized housing benefits for her own family members.198    In 2020, tenant fraud investigations in Philadelphia199uncovered hundreds of ineligible recipients, contributing to200more than $1.6 million in identified fraud.201    This is just a very short list. These numerous examples--202there is no cherry-picking here--this is widespread.203    So these numerous examples of corruption are just a part of204the issue. Financial mismanagement is equally prevalent. For205example, HUD took over the Atlantic City Housing Authority in206July 2025, after declaring it in substantial default following207years of financial mismanagement since 2022.208    These failures are not administrative. They are operational209and they affect daily living conditions and quality of life.210    As stated, approximately 5 percent of PHAs fail HUD211financial management standards, and as stated, roughly 10212percent fail physical condition inspections.213    As well, procurement controls inside many PHAs are often214structurally weak, especially considering that many contracts215under $10,000 can be issued without competitive bidding.216    In smaller housing authorities, procurement authority is217often centralized to one individual, and at the property level,218some authorities fail to reinvest capital funds or leverage219financial tools.220    The lack of controls on procurement, absence of anti-fraud221tools in case of corruption makes HUD a prime candidate for222where we want to stop waste, abuse, and fraud. That is why the223Trump Administration and this committee have made oversight and224enforcement of PHAs a priority.225    Earlier this year, HUD announced that it was placing the226Manhattan Housing Authority in Kansas under Federal monitorship227because it has systematically failed to achieve HUD's most228basic requirements.229    While disappointing, we should all be pleased to see HUD is230taking oversight of PHAs far more seriously.231    As well HUD, under Secretary Scott Turner, is deploying232enhanced data analytics and AI-enabled tracking systems to233follow funds from HUD through PHAs and down to subcontractors.234    The Department has created an internal fraud detection235strike force and increased physical inspections by 25 percent236in 2025. Yesterday, alongside Chairman Hill and Subcommittee237Chairman Flood, we sent oversight letters to 32 PHAs designated238as troubled by HUD, seeking detailed records on financial239management, procurement, and property conditions.240    We will also review high-performing housing authorities to241identify management practices that could be replicable and be242shown as being best practices. We can see how funds are243controlled and whether residents are receiving the housing244conditions Federal law requires.245    So this committee intends to ensure those standards are246enforced in partnership with HUD and Secretary Turner so that247Federal housing dollars are protected and properly248administered.249    I yield back.250    I now recognize the ranking member of the subcommittee, Mr.251Green, for 4 minutes for his opening statement.252253   OPENING STATEMENT OF HON. AL GREEN, RANKING MEMBER OF THE254     SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS, A U.S.255                   REPRESENTATIVE FROM TEXAS256257    Mr. Green. Thank you, Mr. Chairman. I thank the ranking258member, and of course I thank the witnesses for appearing259today.260    The title of this hearing is Building a Solid Foundation,261Restoring Trust, and Transparency in Public Housing Agencies.262However, I believe that a better title for the hearing would263include at least five additional words. These five additional264words are ``lost under the Trump Administration.''265    The title would appropriately now read, ``Building a Solid266Foundation, Restoring Trust and Transparency in Public Housing267Agencies Lost Under the Trump Administration.''268    The truth is, if we want to address the oversight of PHAs269by HUD, we must begin by looking at HUD's Secretary--Secretary270Turner--and we have to review his actions since he has taken271office.272    Shortly after the Secretary took office, he began with the273Department of Government Efficiency and with others in the274administration, they together decided that they would dismantle275HUD and undermine the agency's ability to fulfill this mission.276    Secretary Turner shuttered, or significantly scaled back,277the operations at the HUD Office of Fair Housing and Equal278Opportunity, as well as several HUD regional and field offices279across the country.280    This includes at least 780 employees terminated from the281Office of Fair Housing and Equal Opportunity, and more than 43282of the HUD--43 percent of the HUD workforce in the field.283    The impact of these measures is already being felt.284According to ProPublica, HUD spent years building the case285against a PHA in the Midwest that favored White applicants and286denied applicants with modest criminal records.287    In April 2025, this PHA offered a six-figure settlement to288these tenants that they had rejected, only to rescind and289withdraw the offer 2 days later, citing President Trump's newly290issued executive order, deprioritizing enforcement of disparate291impact laws.292    These delays and cuts will continue, and they will continue293to hinder HUD's ability to oversee the public housing294authorities we are discussing today.295    Chronic underfunding, lack of compliance, and insufficient296oversight has resulted in the Trump Administration's severe297cutbacks in these housing programs, which make the programs298less safe and less effective.299    We must cease acknowledging the problems while ignoring the300solutions. The solutions are available to us--proper funding,301proper oversight, and also proper testing, something the302Secretary seems to have little knowledge of as a result of303questioning him at a prior hearing.304    At this time, I yield back the balance of my time.305    Chairman Meuser. The ranking member yields back. We will306now move to witness testimony. If the chairman of the full307committee or the ranking member come in, we will yield to them308for their opening statements, but we will start and welcome the309testimony of Mr. Bart Schwartz first off.310    Mr. Schwartz is a founder and chairman of Guidepost311Solutions, where he conducts investigations and provides312compliance, ethics, and integrity monitoring. In 2019, Mr.313Schwartz was selected to serve as the Federal monitor of the314New York City Housing Authority, NYCHA. Throughout his 5-year315monitorship, Mr. Schwartz and his team oversaw the316implementation of HUD agreement, aimed at reforming NYCHA, to317improve residents' living conditions. Mr. Schwartz received his318bachelor's degree from the University of Pittsburgh--I like319that--and his juris doctorate from the New York University320School of Law. So, welcome.321    Also, Mr. Chase Haller: Mr. Haller is deputy attorney322general and section chief of the homeowner protection unit for323the attorney general office for the State of Indiana. Prior to324this role, Mr. Haller worked at the neighborhood Christian325legal clinic where he focused on housing and consumer justice326issues. Mr. Haller graduated with a bachelor's degree from327Indiana University in Bloomington and received his juris328doctorate from the University of Dayton School of Law. Welcome.329    Mr. Milan Ozdinec: Mr. Ozdinec is the president of Vargas330Premier Corporate Consultants which specializes in affordable331housing and government consulting. Mr. Ozdinec has served332several roles at HUD. Most recently he served as the deputy333assistant secretary for the Office of Public Housing and334Voucher Programs, which oversees the Housing Choice Voucher335Program and serves 2 million low-income Americans. Mr. Ozdinec336started his career with the Bethlehem Housing Authority where337he restored 100 distressed rental units under the Section 8338Program. Mr. Ozdinec received his bachelor's degree from339Moravian College, and we have with us, Mr. Oberdorfer: Mr.340Oberdorfer is the director of policy and legislative affairs at341the National Association of Housing and Redevelopment342Officials, where he provides member agencies with one-on-one343technical assistance and policy guidance, among other344responsibilities.345    Mr. Oberdorfer previously worked in research relating to346rural, affordable housing, senior housing, and supportive347housing. He received his bachelor's degree from the University348of Washington and a master's degree in community and regional349planning from the University of British Columbia.350    I thank each of you for taking the time to be here. Each of351you will be recognized for 5 minutes to give an oral352presentation of your testimony. Without objection, your written353statements will be made part of the record.354    Mr. Schwartz, you are now recognized for 5 minutes for your355remarks.356357STATEMENT OF BART M. SCHWARTZ, CO-FOUNDER & CHAIRMAN, GUIDEPOST358                           SOLUTIONS359360    Mr. Schwartz. Thank you. My name is Bart Schwartz, and I am361the chairman and co-founder of Guidepost Solutions, a global362investigations, compliance and consulting company of about 300363full-time employees.364    I am also an attorney, and I was chief of the criminal365division of the U.S. Attorney's Office in the Southern District366of New York.367    As the chair has stated, I was the first monitor of NYCHA368from 2019 through 2024, and the comments that I have today are369based on the reports--the public reports--that we submitted370each year and also the final report that I submitted in 2024.371    The team that I put together pursuant to the agreement that372NYCHA signed included engineers, architects, attorneys,373consultants, IT specialists, and administrative staff but in374addition to that, I added a team of highly skilled former New375York City detectives. It was that group that--when I turn to376the corruption aspects of the monitorship--it was that team377that developed the information that resulted in 70 indictments378by the U.S. Attorney's Office in the Southern District.379    The investigators visited developments across the city380every day, taking pictures, talking to residents and employees,381and writing reports. They developed information through many382sources and cultivated relationships.383    They documented suspicious circumstances involving NYCHA384personnel and contractors and developed a record of shoddy work385and materials that were being used.386    It was the few cases that these prior detectives developed387that ended up with the 70 indictments later brought by the U.S.388Attorney's Office.389    As far as I can tell from the public record, those 70390cases, approximately $15 million of contracts were involved.391Approximately $2.1 million of bribes were paid, and392approximately $2.1 million of fines were meted out by the393court.394    One of the questions that I have to present today is395wondering what happened to the $11 million, between the $15396million and the $4.2 million? Because I think it demonstrates397an ongoing problem at NYCHA, which is that it tends not to398defend itself.399    I know many of you may think that is not true, but in fact,400they tend to take the punches and then move on rather than try401to go after those who have been unfair to NYCHA and have been402noncompetitive and who have been corrupt.403    So, I think that is one area that I would ask you to404address but more generally, the problem was that NYCHA had no405integrity or program at all. There was not even a code of406conduct. We saw poor management, shoddy work by field407employees, failure to use technology, a lack of accountability.408    One example would be annual reviews. Almost all of us are409reviewed annually, but NYCHA refused to have annual reviews of410employees, reviews which would be used to help the workers do a411better job, not to punish the workers.412    Despite all of this and the difficulties we had, we had413some excellent results. As part of the mold action plan, NYCHA414installed new and performed major repairs on415approximatelyventilation ducts and fans which reduced mold416claims by over 50 percent.417    When we first started, NYCHA was cleaning lead from418apartments at the rate of 400 a year. When we finished, they419were doing 700 a month. We create--NYCHA had no definition for420``clean.'' We created definitions with photographs and so421forth.422    If I may, I would ask that the remainder of my remarks be423included in the record as I see my time is gone. Thank you.424425    [The prepared statement of Mr. Schwartz follows:]426    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]427428    Chairman Meuser. The gentleman's time is expired. Thank you429for your testimony. We now have Mr. Haller. Mr. Haller, you are430now recognized for your 5-minute remarks.431432   STATEMENT OF CHASE M. HALLER, DEPUTY ATTORNEY GENERAL AND433   SECTION CHIEF, HOMEOWNERS PROTECTION UNIT, OFFICE OF THE434                   INDIANNA ATTORNEY GENERAL435436    Mr. Haller. Thank you, Chairman and members of the437subcommittee. My name is Chase Haller, and I serve as the438deputy attorney general and section chief of the homeowner439protection unit in the Office of the Indiana Attorney General,440Todd Rokita, who is a former member of your body.441    I appreciate the opportunity to testify today regarding the442critical need for enhanced Federal oversight of public housing443agencies. My home State of Indiana has about 6.5 million444residents. About 2.1 percent, or 146,000, of them live in445federally subsidized housing as of 2023.446    Seventy-six percent of them are categorized as extremely447low-income households, so they represent some of our State's448most vulnerable residents.449    Our office, with a dedicated team of 5, and an agency of450400 public servants, has aggressively enforced State housing451laws over the past 5 years under the leadership of Attorney452General Rokita, uncovering systemic issues like sham453nonprofits, abandoned housing projects, and severe habitability454issues.455    One of our most time-intensive enforcement actions has456involved Indianapolis Housing Agency, which administers HUD457funds for low income, elderly, and disabled residents, via458Section 8 vouchers and other HUD programs.459    Despite our Rental Assistance Demonstration (RAD)460conversion and substantial capital upgrades years prior,461residents of Richard G. Lugar Tower, a 17-story, 200-unit462building, serving elderly and disabled tenants in Indianapolis,463have faced persistent problems--hot water and elevator outages,464security lapses, repeated leaks, and trespassers intimidating465residents.466    After tenants organized and filed 59 complaints with our467office in early 2023, we conducted an investigation and468ultimately negotiated an assurance of voluntary compliance with469Indianapolis Housing Agency (IHA), mandating licensed property470management, stronger security protocols, and regular471inspections for a period of 2 years.472    Attorney General Rokita also visited the building in473December 2023 and spoke with residents about their474frustrations.475    In April the following year, HUD engaged in a takeover of476IHA through a cooperative endeavor agreement. Progress at Lugar477stalled in the summer of 2025 when IHA's funding shortfalls478triggered a default on our agreement, prompting the departure479of management and security vendors, and a resurgence of480disorder.481    We have since renegotiated a new agreement with the owner482of the building with more detailed reporting standards,483including a staffing plan, security incident reporting, and a484resident's council to rebuild trust.485    Our office has also learned that RAD conversions, like at486Lugar Tower, are unable to use generalized HUD funding for487maintenance and operations, creating possible disparities488compared with non-RAD sites, like the nearby John J. Barton489Tower, where IHA is more capable in its responses to490maintenance and security needs.491    Recent local reporting also investigated incidents where492Section 8 tenants were made homeless when ownership transfer493paperwork went unprocessed. Owners say IHA failed to respond or494transfer vouchers after acquisitions, cutting off subsidy495payments and triggering evictions of tenants with valid496vouchers.497    These breakdowns illustrate how weak oversight can produce498catastrophic outcomes for families relying on housing499assistance.500    With new leadership at IHA and with HUD's assistance, we501are hopeful, for the sake of tenants under its care, that IHA502can change course.503    Similarly, our office has seen significant inspection and504habitability failures at other HUD funded projects. In June5052024, we sued the owner of Bingham Square Apartments in506Anderson, Indiana, after the owner abandoned tenants.507    After dozens of failed housing-quality standards508inspections and abatement orders, the owner simply canceled509their Section 8 contract and began evicting subsidized tenants510and the property continued to fall into severe disrepair,511including one building that burned to the ground and was never512rebuilt.513    In another case we secured a settlement for a voucher514holder whose apartment was riddled with mold and reportedly515made her children sick for months. A third-party inspector we516hired found building-wide mold, even though her unit had passed517a HUD inspection just weeks prior.518    These are not isolated incidents. They are predictable519outcomes when oversight fails and accountability is deferred.520The path forward requires aligning authority with521accountability.522    If agencies receive Federal dollars to administer life-523sustaining housing assistance, they must also meet verifiable524standards for fiscal stewardship, livable property conditions,525and adequate tenant protections.526    Our office asks this committee to consider stronger HUD527auditing requirements, including annual financial reviews for528high-risk agencies, consider performance-based funding metrics,529tying funding allocations to things like voucher utilization530rates and inspection scoring, and audit of the RAD Conversion531Program addressing disparities in tenant treatment, unit532habitability, and ongoing funding viability concerns, finally,533more robust and verifiable inspection standards to hold534landlords accountable, ensuring that Federal funds support safe535housing and not neglect.536    Chairman, Members, all Hoosiers deserve safe, dignified537housing and the Indiana attorney general's office will continue538to work toward ensuring that happens in our State. I539appreciate, again, the opportunity to offer testimony today.540Thank you.541542    [The prepared statement of Mr. Haller follows:]543    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]544545    Chairman Meuser. The gentleman yields. Thank you for your546compelling testimony as well.547    Mr. Ozdinec, you are now recognized for 5 minutes for your548remarks.549550    STATEMENT OF MILAN M. OZDINEC, PRESIDENT VARGAS PREMIER551                    CORPORATION CONSULTANTS552553    Mr. Ozdinec. Thank you, Mr. Chairman, distinguished554members. I appreciate the opportunity to testify today. My name555is Milan Ozdinec, and I am a retired executive who spent my556entire life in the public housing operations field.557    Thirty-three years at HUD, I served in a number of critical558roles, most notably as the director of the HOPE VI program and559ultimately the deputy assistant secretary to implement the560operating fund for the public housing program, as well as the561Section 8 appropriation.562    I am here today to talk about hope and good government, and563the things that a number of our housing authorities over the564last 30 years have done to bring them into the mainstream of565both property management and compliance with regulatory566requirements.567    I agree with Chase, oversight matters. In our business,568especially because we have a significant regulatory environment569with which our housing authorities have to comply. So, I agree570that oversight is a significant part.571    The HOPE VI program, which some of you may be aware of, was572borne out of something called the National Commission on573Severely Distressed Public Housing that was published in 1988.574    I would encourage each of you to read that report because575it was 40 years ago, and we are experiencing some of the same576problems.577    However, the HOPE VI program, after the first 2 years of578appropriation of $800 million, became the laboratory for579turning some of the worst public housing properties around into580some of the best in our portfolio.581    It was a learned process from the original grant agreement582to a point where housing authorities were sitting around a583closing table with high finances and mixed finances, closing a584real estate transaction that really mattered to communities.585    Unfortunately, the public housing program, including586capital fund, are not equipped to allow public housing agencies587to manage their existing inventory of its units.588    The Brooke Amendments, while certainly well intentioned,589set a situation for housing authorities not able to collect590more rent and remember the basic principle of property591management is to be able to collect the rent, with the592understanding that the Federal Government would make up the593difference and that is what we have today, which is the594operating subsidy.595    Today we have over 887,000 units in the portfolio, and the596question is, from a truly property management perspective, what597do we intend to do with those 887 units?598    The implementation of HOPE VI set forth a plan that some599units in the inventory would have to be demolished because of600their physical condition.601    So let me just say the things that I think the Department602and the industry have done over the past 30 years to put this603committee in a better position and this administration in a604better position.605    I understand Chase's point, and clearly that is happening606in Indianapolis.607    The first thing that we did was, we established the Real608Estate Assessment Center. We converted public housing609accounting to Generally Accepted Accounting Principles (GAAP).610Receiverships were strengthened.611    It is a persistent problem. Today there are still 25612percent of the public housing authorities within our portfolio613that are either troubled or near trouble. So, it is a614persistent problem. We need to figure out what the answer is.615    Our development program was improved to include mixed616finance and mixed income, bringing housing authorities into the617real development world and introducing them to things like tax618credits, bond financing, and other financing tools.619    We also got more skin in the game from local governments620and local investors. We demolished and rebuilt some of the621worst and turned into some of the best, and we can look at622those.623    Somebody needs to speak for the real estate here. We have624got 887,000 units. How do we intend to move forward? Hopefully625I am able to help answer some of those questions.626    Thank you very much for the opportunity to testify, and I627am here available to answer any questions you might have.628629    [The prepared statement of Mr. Ozdinec follows:]630    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]631632    Chairman Meuser. Thank you, Mr. Ozdinec, for your633testimony. We will now move on to Mr. Oberdorfer. You are now634recognized for 5 minutes for your remarks.635636STATEMENT OF ERIC OBERDORFER, DIRECTOR, POLICY AND LEGISLATIVE637  AFFAIRS, NATIONAL ASSOCIATION OF HOUSING AND REDEVELOPMENT638                           OFFICIALS639640    Mr. Oberdorfer. Good afternoon, Chairman Meuser and Ranking641Member Green. Thank you for this opportunity to comment on642public housing agency, or PHA, oversight and transparency.643    My name is Eric Oberdorfer, and I am the director of policy644and legislative affairs for the National Association of Housing645and Redevelopment Officials, or NAHRO.646    NAHRO's over 26,000 members include public housing agencies647and community development organizations of all sizes, serving648rural, suburban, and urban areas across the United States.649    This is an incredibly important topic for our members who650provide millions of homes to families across the country.651    The Federal rental assistance programs that our members652operate include the Public Housing and Housing Choice Voucher653Programs. They house families, children, veterans, seniors, and654disabled individuals.655    These programs are essential to making housing more656affordable, reducing homelessness and housing instability, and657increasing resident economic outcomes.658    PHAs are uniquely positioned to serve their local659communities. Governed by local boards that include community660leaders and residents, PHAs are locally accountable and661responsive.662    This helps PHAs stretch limited Federal dollars, respond to663local housing markets, provide safe, secure housing, and664partner with landlords and property owners.665    HUD also holds PHAs accountable through two assessment666tools. HUD uses the public housing assessment system, or PHAS,667for public housing, and the Section Eight Management Assessment668Program, or SEMAP, for the Housing Choice Voucher Program.669    Overall, PHAs are responsible stewards of Federal dollars.670According to recent HUD data, most agencies are high or671standard performers under PHAS or SEMAP. Data shows that PHAs672operate these programs with high degrees of accuracy and673accountability.674    That said, recent reports appear to overstate payment675errors without proper context. In Fiscal Year 2025, had676identified approximately $1.5 billion in improper payments out677of a total $33.9 billion in the tenant-based rental assistance678program.679    Most of this stems from inactive SAM.gov registrations. In680these cases, assistance was properly paid to eligible families,681but the vendor registration needed reactivation. That is an682easy fix.683    When this technical category is removed, the program's684improper payment rate drops from 5 percent to just over 1685percent. While any error should be addressed, an effective rate686near 1 percent in a nationwide program serving millions of687households and landlords reflects the strong financial688stewardship of taxpayer funds by PHAs.689    The other findings in the report of compliance matters that690HUD's oversight systems and PHA processes are designed to flag691and correct. They demonstrate successful program monitoring,692not systemic abuse.693    Federal rental assistance programs also include strict694eligibility verification rules to ensure that only qualified695individuals receive assistance and that rental payments are696timely and accurate. These safeguards have been in place for697decades and work effectively.698    PHAs are also subject to comprehensive, independent, yearly699audits that review financial statements, internal controls, and700compliance with HUD and Federal rules.701    This is the same standard used in the private sector to702demonstrate responsible financial management.703    This oversight occurs while PHAs are operating against a704backdrop of chronic underinvestment, and while funding alone705will not solve the affordable housing crisis, responsible and706adequate Federal investment is essential to give local707communities the tools they need to meet the growing demand.708    Decades of underfunding force agencies to manage complex709responsibilities with limited staff and insufficient resources,710making the job harder and posing more administrative risks.711    PHAs meet performance standards, pass audits, maintain712properties, and administer assistance to millions of families713with a high degree of accuracy and accountability. Time and714again locally governed agencies demonstrate that they are715effective stewards of Federal housing resources, doing more716with less, to serve their communities.717    Although PHAs are succeeding despite chronic718underinvestment, when looked at the data, PHAs could see even719more success with full funding, coupled with appropriate720oversight.721    This would lead to increased training and professional722development opportunities, including training related to ethics723and allowing agencies to house more families.724    Last, adequate support for HUD staff is essential for725maintaining the integrity and transparency of Federal rental726assistance programs. The partnership between HUD and PHAs is727critical to our success.728    Thank you, and I look forward to your questions.729730    [The prepared statement of Mr. Oberdorfer follows:]731   [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]732733    Chairman Meuser. Thank you. We will now turn to member734questions. As the chair, I now recognize myself for 5 minutes.735    Mr. Haller, the Indianapolis Housing Agency was designated736by HUD as a troubled PHA and later taken over by HUD. Now can737you please describe beyond what you stated in your opening738testimony, some of the conditions at IHA when it was designated739as troubled?740    Mr. Haller. I believe the--thank you for the question,741Congressman--I believe the question relates to how IHA742initially came into the Federal takeover.743    At that time--that was actually in April 2024--so we were a744year, year and a half into our investigation into the745circumstances at Lugar Tower Apartments. We were also receiving746lots of complaints related to other properties maintained by747IHA.748    We had a distinct focus on Lugar Tower because that is a749tower that, it is a very prominent place in downtown750Indianapolis, a very fast-growing area, and residents had been751complaining. There had been news reports for many months752related to the conditions there.753    I mean, what we observed when we first went in there was754pretty disheartening. There were clearly people in the building755that were not supposed to be there, harassing tenants.756    We actually found that many of the trespassers actually757were using the stairwells as bathrooms, and so the conditions758at that property have been, since that time, very disruptive to759the lives of tenants there.760    Chairman Meuser. Have the conditions improved over the last761year?762    Mr. Haller. That is a--it is a difficult question to answer763because it is--there has been some marginal improvement,764certainly recently when we visited that particular building--765and we have had productive discussions with IHA's new766leadership and with HUD, who is working with them to turn767around the agency.768    I think one of the lessons we have learned there is that769help really should have come many years ago.770    Chairman Meuser. I agree. What are you putting into place771now to improve that situation, or what is being put into place?772    Mr. Haller. Sure. So right now, we actually have a second773settlement agreement we have signed with the new owner of the--774with the owner of the property, which has more public775transparency to it.776    They have to report to us certain security incidents within77748 hours. They have to give us a monthly written report which778we can file publicly. We can do 12 unannounced inspections as779well as regular inspections, so----780    Chairman Meuser. Thank you.781    Mr. Schwartz, NYCHA is a prime example of fraud of PHAs,782with, as you stated, 70 former officials convicted of783corruption-related offenses last year.784    Can you describe at a high level, or anyway you would like785actually, the corruption schemes that occurred at NYCHA and the786level of sophistication or unsophisticated?787    Mr. Schwartz. Yes, thank you. The 70 cases that were788brought were really at a rather low level of NYCHA personnel,789but at a level that was the most--the closest to the residents.790So the residents were directly hurt by the bribery that791occurred.792    NYCHA had not done anything to really examine, inspect, and793have oversight over this problem. They did nothing to see794whether the work that was being approved really met the quality795requirements.796    As I said, this is something that really hurt the residents797in their homes.798    Chairman Meuser. Sure. If you can, with your experience and799background, maybe provide us--perhaps in writing if you would800not mind--some best practices that you feel would improve such801PHAs. I do not have time for the answer now, sir, but if you802would be so kind to do that.803    Mr. Schwartz. I do have a couple of thoughts--and it is not804just for PHAs. It is for companies. It is for a lot of805organizations I work with--and that is to create a culture806where there is integrity and there is respect for the work that807you do, and that you are trained to do the work that you are808supposed to do.809    There is a lack of training. We have had--we made great810work strides once we brought in private sector people who were811teaching NYCHA employees how to do their work.812    Chairman Meuser. Thank you very, very much.813    Mr. Ozdinec--my apologies--what reason did HUD stop814reporting improper payments?815    It was during your time at HUD, we would submit its816estimate of improper payments annually, and then HUD has ceased817doing that.818    I am out of time, so I am going to ask you, if you would819not mind, we can concur with that afterwards or provide it in820writing.821    I yield back.822    Now Ranking Member Waters is recognized for 5 minutes of823questioning.824    Ms. Waters. Thank you very much, Mr. Chairman.825    I was just trying to review all of the testimony that I had826not been able to have a chance to read, et cetera but let me827just say, I know a lot about public housing. We have public828housing in the Los Angeles area, big units.829    We have Nickerson Gardens, Jordan Downs, Imperial Courts,830Gonzaque Village. I know them all. At one time, it was in my831congressional district, and then I was reapportioned, and they832were out, and now they are back in.833    Now, I created some programs on my own, and my programs had834to do with very initial job training, connecting with835employers, and creating people to go out and find jobs.836    For the people that retrained in my program, we connected837them, and it has worked. As a matter of fact, in Nickerson838Gardens, I have 2 young, former gangbangers who we got jobs,839and they were responsible for helping to lay cable back when840they were putting cable into public housing.841    They ended up managing, and they just retired with homes,842children have gone to college, and all of that.843    Now, first of all, we have got to understand, it takes844resources. It takes money to deal with public housing. You have845poor people piled on top of poor people, on top of poor people.846    There are a lot of things that you are doing, but this lead847issue and the mold issue should have been taken care of a long848time ago. We have been working on it for years and so I do not849know how much money is being dedicated to it, but it can be850eradicated if it is actually done.851    Of course, if you have corrupt people who are managing,852yes, I say get rid of them. Know what you are doing.853    One thing I have learned is, not one public housing program854that I have come in contact with had a pre-entry program where855anyone who was qualified and was getting an opportunity to live856in public housing, the family was brought in and went over with857them what this public housing is all about, what was expected858of them, how the trash was supposed to be dumped, what have859you, how to use the elevators, all of that.860    You just assume that if someone gets public housing861assistance, you just put them in there and many of them have862had no experience. They have been going from place to place and863place to place and all of that. That I am not seeing done.864    The other thing is how to identify leadership inside the865public housing because people who come in saying, I am your866role model, and this is what I want you to do, does not work.867    You have to identify leadership that is in public housing868to help carry out the program.869    Now, I want you to know, I was just in Jordan Downs, one of870the housing developers in my district that has ended up in a871way that they are developing, renovating, doing a whole--just872wonderful things. Guess what? Fifty percent of the work was873done by Section 3 who live in public housing. How many of you874really use Section 3?875    I want to tell you, the young people were glad to get those876jobs. They have stayed on them, and they were being honored for877the work that they do.878    Section 3 is not being utilized in many of the public879housing projects where you hire the people who live there, you880train the people who live there, and they become part of what881is known as not only the development and the renovation, but882also people who live there who help even when they are not in883the 8-hour job all over the public housing developments.884    First of all, you got to have money, and this business885about we are doing it, but it does not cost anything, I do not886buy that. It costs money. It costs investment.887    Section 3, we have it in law, and it is not being utilized.888It has got to be utilized--introduction to what is expected of889tenants and then ongoing job training programs inside.890    I could talk about this all day. I have done it. I have891created programs, and the thing about it is, you got to work892with the people inside the public housing, develop leadership,893understand leadership, and get them involved.894    Enough said. I could talk about this all day. I yield back.895    Chairman Meuser. The ranking member yields back.896    The gentleman from Arkansas, the chairman of the full897committee, Chairman Hill, is now recognized for 5 minutes.898    Chairman Hill. Thank you, Mr. Chairman, and I thank the899ranking member for her knowledge and passion about900accountability in public housing. We are grateful for her901decades of passion on this topic.902    I want to reflect on the panel. It is a very good panel.903Thank you for your testimony about what we are witnessing in904Little Rock, with Little Rock Public Housing Authority.905    In 2023, in a detailed audit by HUD, housing authority in906Little Rock, otherwise known as Metropolitan Housing Allowance,907was put in the troubled PHA category, and among an extensive908list of deficiencies were, lacked internal control since 2016,909financial reporting, recordkeeping. None of those impacted--or910met HUD standards and $30 million is missing, and nobody can911find where it went.912    After 11 years of complaining to city of Little Rock913Housing Authority, the HUD local office, the HUD regional914office in Dallas, finally our attorney general--and that is why915it is very interesting to have Mr. Haller here--prosecuted,916criminally, a landlord in the Section 8 program after 10 years,917and was the first validation of tenant complaints in a decade.918    So let me start with you, Mr. Haller. In Indianapolis, you919had a RAD program that went awry, is that right, at Lugar920Tower?921    Mr. Haller. My understanding with Lugar Tower, Congressman,922is that, yes, it went through a RAD conversion and is now owned923almost fully by a private investor.924    Chairman Hill. Was that contract a bad contract that then925said it was inadequately--like an inadequate cash reserve fund,926an inadequate rental collection process, an inadequate safety927program, an inadequate tenant whistleblower assistance program?928    Because we just modernized Lugar Tower, right, and we took929money to do that on a long-term RAD demonstration program, and930yet it sounds like it failed. Is that fair based on what your931investigation showed?932    Mr. Haller. I think what we have observed with Lugar Tower933in Indianapolis, I think that is a fair assessment, that in934that particular case, that program has actually significantly935hurt the tenants who live there. They would tell you that if936they were here today.937    Chairman Hill. What is the biggest weakness there, the938contractual right between the RAD owner-developer? Are the939people too optimistic about the management expenses and the940rents collected?941    Tell me why, once you make that kind of major capital942expenditure, you have all the problems you outlined, which were943not just ``ran out of cash'' problems. It sounds like the whole944thing was a fiasco.945    Mr. Haller. Yes, Congressman, I mean, to your question, our946understanding is that after the RAD conversion, the project947itself has not sustained enough cash-flow from collecting rents948in order to sustain the--or to fund the ongoing operation and949maintenance of the building, which begs the question how did950that come to happen, right?951    Chairman Hill. Well, let me stop you there and say, who is952responsible for that? The Indianapolis Housing Authority, the953Office of HUD in Indianapolis, the regional office? Who says954that was good to go contractually to do that program, and does955anybody bear any responsibility besides--who?956    Mr. Haller. That I cannot really speak to that specific RAD957conversion. It was many years ago. I know one of the difficult958parts is assigning accountability when you have had potentially959years of poor performance, right?960    Chairman Hill. Let me stop you there.961    Mr. Ozdinec, since you were a former long-time HUD leader962in public housing, as a Deputy Assistant Secretary (DAS) there.963Who is to be held accountable for that?964    Mr. Ozdinec. Thank you for the question, Congressman. We965have got 2,300 public housing authorities. We are going to have966Indianapolises unfortunately. I think the remedy for these967types of abhorrent situations, like Indianapolis, is oversight.968    Chairman Hill. Okay. Let me stop you there. This is my969whole complaint. Regardless of whether HUD is adequately funded970or inadequately funded, there is no oversight. No one takes any971responsibility. That is what I have seen in Little Rock--zero972responsibility--zero responsibility at the HUD's local office,973the city board.974    They have complained mightily, and they appoint the975directors to the public housing authority, and I think the976victims here are the tenants in public housing and the977taxpayers, and there is no restitution.978    I yield back. Mr. Chairman, I commend you for this hearing.979    Chairman Meuser. The chairman of the committee yields back.980    The gentlewoman from Georgia, Ms. Williams, is now981recognized for 5 minutes.982    Ms. Williams of Georgia. Thank you, Ranking Member Meuser--983well, thank you, Chairman Meuser and Ranking Member Green--I am984giving you an upgrade over here, Mr. Green--and thank you to985our witnesses for joining us today.986    In 2023, the HUD Office of the Inspector General conducted987an investigation into HUD's oversight of the physical988conditions at public housing authority complexes.989    Disturbingly, the Office of Inspector General (OIG) found990that HUD-filled offices were inconsistent in overseeing whether991public housing authorities corrected life-threatening992deficiencies identified during inspections, and that HUD did993not even track PHAs' corrections of non-life-threatening safety994deficiencies.995    This is problematic. I am deeply concerned about these996findings, especially given that the Trump Administration has997significantly slashed HUD staffing this year alone.998    At the beginning of the year, or last year, Elon Musk999proposed a 50 percent reduction in staff who administer public1000housing vouchers and oversight. If HUD already lacked the1001capacity to provide adequate oversight of public housing1002authorities in 2023, how can HUD possibly be doing more now1003with even less?1004    Mr. Oberdorfer, can you please describe any trends that you1005have observed in HUD oversight since this 2023 report, and have1006there been any changes in the rate, frequency, or findings of1007HUD inspections of public housing authorities?1008    Mr. Oberdorfer. Yes, thank you for that question,1009Congresswoman. As you mentioned, staffing is a huge component1010of this for HUD, especially as agencies have their inspections1011completed and that information gets to the Department.1012    There needs to be quick turnaround between the Agency and1013Housing and Urban Development, especially if there are issues1014related to the life and safety of a resident.1015    Two thousand twenty-three is an interesting year for public1016housing inspections because that is the year a new protocol1017went into place. This is the NSPIRE, or National Standards for1018the Physical Inspection of Real Estate.1019    This was an effort that HUD had been working on for some1020time to try to make inspections less subjective and more1021objective, to identify real risks and issues, and specifically,1022risks and issues that would occur in units.1023    So what we are seeing right now in terms of trends with1024inspections is, there are a lot more inspection findings that1025are rated at a 59, which essentially means failing, but failing1026because of the unit.1027    Now, I think you can look at those two ways. One, the most1028important is that obviously we need to make sure those units1029get updated and fixed so that they are safe for the residents.1030    Two, it also means this new inspection protocol is doing, I1031think, good work in terms of oversight for the quality of the1032units and the safety of the residents, because in other cases1033that unit and that property may have passed.1034    Now with these shifts in how HUD is actually looking at1035their calculations for inspection scores, these would trigger1036that failure, which would mean the agency would need to act1037right away to fix those concerns.1038    Ms. Williams of Georgia. Thank you.1039    Mr. Oberdorfer, during the Financial Services Committee's1040oversight hearing with Secretary Turner just last week, I took1041the opportunity to press the Secretary about some of the dire1042living conditions that some of my constituents in Atlanta are1043facing in public housing.1044    One particular egregious story unfolded at Forest Cove. It1045is an apartment complex in Atlanta, and it made headlines in10462022 because residents were forced to live in some of these1047unsafe conditions.1048    They faced holes in their walls and floors, unrepaired fire1049damage, pests, rats, rodents, before the apartments were1050ultimately condemned and eventually torn down.1051    After the building was condemned, HUD issued an official1052debarment order to Millennia's CEO and Millennia Housing,1053prohibited them from participating in any new business with1054HUD, its Office of Multifamily Housing Programs, and with any1055Federal Government Agency or Federal programs for 5 years.1056    However, it does not affect Millennia's existing properties1057or contracts with HUD or the ability of Millennia to contract1058with HUD after the 5-year prohibition expires.1059    Mr. Ozdinec, can you please describe the role of HUD in1060disbarring bad actors in the field, and describe the role of1061disbarment in restoring residents' trust in HUD and their local1062public housing authority?1063    Mr. Ozdinec. Thank you very much for that question. I am1064not familiar with the incident that you--and the debarment that1065you mentioned in your example. What I can say is that HUD1066serves as a partner and does oversight to the extent that it1067has resources to do so.1068    The other opportunities that are available to the1069Department is the Office of the Inspector General. That is--it1070is their calling to ferret out fraud and follow it through to1071the logical conclusion.1072    Now, I do not know--and, again, in your example--where the1073responsibility lies there, but clearly the Department took1074steps and debarred the vendor that you mentioned.1075    Ms. Williams of Georgia. Thank you. I am grateful for this1076conversation today because our people back home, and every1077district across the country, deserve safe, desirable living1078conditions.1079    Chairman Meuser. Great. The gentlewoman yields back.1080    The gentlewoman from Missouri, Mrs. Wagner, the chair of1081the Subcommittee on Capital Markets, is now recognized for 51082minutes.1083    Mrs. Wagner. I thank you, Mr. Chairman, and thank our1084witnesses.1085    For decades, mismanagement, fraud, waste, and abuse at1086public housing agencies have deprived residents of access to1087safe, stable housing while also, frankly, squandering enormous1088sums of taxpayer dollars.1089    For example, near my district, mismanagement at the East1090St. Louis Housing Authority was so severe, it resulted in the1091Department of Housing and Urban Development, HUD, taking1092control of the agency for over 30 years.1093    At its core, the problem at the St. Louis Housing1094Authority, were a product of mismanagement and, most1095importantly, fraud.1096    Mr. Schwartz, similar issues occurred at the New York City1097Housing Agency. Based on your work, what systems within public1098housing agencies are most susceptible to waste, fraud, or1099abuse?1100    Mr. Schwartz. Well, I think in public housing, as well as1101in other institutions, it is the lack of oversight, the lack of1102auditing, the lack of independence, the lack of inspectors, and1103the failure to go after people who try to defraud the1104authority.1105    Mrs. Wagner. I have several follow ups to this, so--and1106your points are very well taken--how can these agencies1107mitigate fraud risks in their procurement systems, for1108instance?1109    Mr. Schwartz. Well, procurement is a good starting point1110because they can have the analytics--or they should have the1111analytics to figure out who is doing the work, who is doing it1112well, how many contracts are they getting, and look for the1113suspicious aspects of these associations.1114    Mrs. Wagner. How can these agencies mitigate the risks that1115their employees are even accepting bribes that we have seen?1116    Mr. Schwartz. Well, and again, I think analytics is part of1117this, but as I said, I went back to some of my old ways of1118doing things as a prosecutor. I--we hit the pavement and we1119asked the people what was going on. We listened to the1120residents. The residents know what is going on. They can tell1121you what the problems are.1122    Mrs. Wagner. That is very interesting. I mean, we have seen1123employees falsifying eligibility information, work orders, on1124and on.1125    So you think that the root of this is oversight by1126leadership but also in talking with residents?1127    Mr. Schwartz. Yes, leadership is primarily responsible1128because it does not create the culture of honesty and1129integrity.1130    All organizations have to deal with this. The housing1131authorities are not different, but I do not think that HUD1132requires a code of conduct. We could not find a code of1133conduct.1134    Mrs. Wagner. They do not require a code of conduct----1135    Mr. Schwartz. We could not find one at NYCHA.1136    Mrs. Wagner [continuing]. for their employees?1137    Mr. Schwartz. We could not find one at NYCHA.1138    Mrs. Wagner. All right. Well, during your monitorship, you1139found a culture of, I think you said, defeatism and failure at1140the New York City Housing Agency.1141    How did this culture impact residents?1142    Mr. Schwartz. Excuse me?1143    Mrs. Wagner. How did it impact residents?1144    Mr. Schwartz. Oh, it was--as I said before, it is really at1145the level of the residents where all the damage was being done,1146where the work that was--the shoddy work was used.1147    You cannot be naive about this. When somebody pays a bribe,1148the bribe does not come out of their pocket. When it comes time1149to do the work, they do not bring in union labor. They do not1150bring in labor that has skills. They do not bring in the1151materials they are supposed to bring in. They make up for the1152bribe, and who suffers? The resident.1153    Mrs. Wagner. While housing agencies are responsible for1154ensuring that these residents have access to the safe, clean,1155housing, HUD is responsible for holding these agencies1156accountable to taxpayers and residents alike.1157    Unfortunately HUD, it looks like, has historically1158struggled to identify issues at struggling or failing public1159housing agencies before they become so, so severe.1160    Mr. Ozdinec, how does HUD ensure the public housing1161agencies are effectively stewarding taxpayer funds?1162    Mr. Ozdinec. Thank you for that question, Madam. So the1163Department, I do believe somewhere about 2000, implemented the1164Real Estate Assessment Center, which collects data from housing1165authorities, both financial and physical data as mentioned by1166Eric, and then analyzes that data and produces scores.1167    Mrs. Wagner. My time is expired. If there is anything you1168have to add to that, if you could do so in writing. I1169appreciate this hearing, and I appreciate all the work that we1170need to do collectively. We have heard a lot of good ideas1171about oversight, et cetera.1172    I thank you, Mr. Chairman. I yield back.1173    Chairman Meuser. The gentlelady yields. The gentleman from1174California, Mr. Liccardo, is now recognized for 5 minutes.1175    Mr. Liccardo. Thank you. Thank you all for your testimony1176today.1177    Mr. Ozdinec, I was interested in particular in your written1178testimony in which you acknowledge that the Brooke Amendment,1179which provides for basic rent protections for tenants, has1180never been adequately funded by the Federal Government.1181    Do you have a sense about what that gap is that would be1182required for us to live up to our commitments to those who live1183in public housing?1184    Mr. Ozdinec. Thank you for that question. I think that has1185always been a debate. We fund the operating fund at 92 percent,1186or call it the percentage proration, whatever you will. It is1187never a hundred percent of what the experts believe is needed1188to administer our programs.1189    There is always--there is a gap of 8 percent, 5 percent.1190You can put a number on it if you would like.1191    It is going to be different everywhere. Each housing1192authority is run differently. That is part of the problem with1193our system as well, is that we have a wide variety of housing1194authorities in the portfolio who serve a wide variety of1195families now, after the last 30 years where we are doing mixed1196finance, mixed income housing----1197    Mr. Liccardo. Right.1198    Mr. Ozdinec [continuing]. which I can go on and talk about1199forever----1200    Mr. Liccardo. I will get there in a moment.1201    Mr. Ozdinec. Okay.1202    Mr. Liccardo. Yes.1203    Mr. Ozdinec [continuing]. as a new way of doing public1204housing.1205    Mr. Liccardo. This capital replacement and maintenance1206challenge is a monster, and I know it has been that way for1207many years.1208    You also acknowledged that there is essentially an1209inability to establish and fund reserves for operations and1210replacement. Is that because of a statutory or regulatory1211barrier, or is that a funding issue?1212    Mr. Ozdinec. It is statutory.1213    Mr. Liccardo. Okay. So literally PHAs who are trying to1214properly manage their assets cannot establish seeking funds,1215standard funds that any housing manager would have in the1216private sector?1217    Mr. Ozdinec. Yes, sir.1218    Mr. Liccardo. So clearly that is one barrier that we could1219eliminate if we wanted public housing to operate well?1220    Mr. Ozdinec. It is.1221    Mr. Liccardo. Then I am interested in your proposed1222solution, and clearly you have had a lot of experience through1223the HOPE VI program, which, as you indicate, leveraged Federal1224funds with more than $5 billion in private equity.1225    Can you help me understand, for those of us who are1226particularly concerned about those families who are living in1227units where there are rent restrictions, what exactly does this1228do for those restrictions and those families?1229    Are we seeing, in these conversions, are families literally1230pushed out in the street, or is there some accommodation made?1231    Mr. Ozdinec. That was one of the original controversies1232about the HOPE VI program, would be displacement. We are1233displacing poor families from what were at the time terrible1234properties, terrible places to live, terrible neighborhoods by1235any standard. Again, the National Commission on Severely1236Distressed Housing was quite clear in 1988 what the problem1237was, and it was obvious.1238    The methods used to do redevelopments, community building,1239community participation, bring good government, and good1240government breeds better government. Things that are going on1241in Indianapolis could have been avoided. I do not know but1242setting a standard for good government locally is really1243critically important.1244    Mr. Liccardo. As we think about the conversion of some of1245these projects to mixed income, help me understand better. Is1246there a net new addition of units? Are we literally taking the1247same exact structure, remodeling it, and some folks who had1248rent restrictions no longer have them?1249    Mr. Ozdinec. Excellent question. Thank you, Congressman.1250    As the public housing inventory drops--we are now at1251887,000 units--the Section 8 program goes up in terms of member1252families being served.1253    When I served with the department--I retired in 2018--the1254appropriation for the Section 8 program was somewhere around 281255billion----1256    Mr. Liccardo. Could I interrupt you for a moment? Does this1257imply, then, essentially that we need a greater commitment to1258housing choice vouchers if we are going to make this work?1259    Mr. Ozdinec. Far be it from me to say that. It clearly is a1260wonderful tool to redevelop neighborhoods and to give families1261the opportunity to move out of distressed neighborhoods into1262communities that will--and I am not sure if you have read the1263Chetty--Raj Chetty----1264    Mr. Liccardo. Raj Chetty, yes. I am familiar.1265    Mr. Ozdinec. It is unbelievable. I spent 35 years with the1266HOPE VI program doing it and hoping that whatever we did was1267going to serve these communities well, and it did, and it1268especially served children.1269    Mr. Liccardo. Yes.1270    Mr. Ozdinec. To me, it was a capstone of my career. I know1271that things that we did as a government had an impact.1272    Mr. Liccardo. I appreciate that sir, and I do appreciate1273Mr. Shetty's research, and it is very valuable. I think what1274this is telling us is we need more financial commitment, fiscal1275commitment to the housing choice voucher program to make these1276opportunities available. Thank you.1277    Mr. Ozdinec. Thank you.1278    Chairman Meuser. The gentleman yields.1279    The gentleman from Georgia, Mr. Loudermilk, is now1280recognized for 5 minutes.1281    Mr. Loudermilk. Thank you, Mr. Chairman, and thank you all1282for being here at this hearing.1283    Earlier today, we had a hearing on housing but in the1284private sector and part of that conversation was the compliance1285costs the private industry has with complying to regulations.1286    We see that across the financial services sector, even in1287small banks where you have to move personnel away from doing a1288productive job to do compliance. I am sure that we see the same1289thing in public housing, especially to the extent that there is1290a long list of regulations and reporting requirements that PHAs1291must follow.1292    As you have heard from Mr. Schwartz, it is unclear whether1293the current reporting requirements are sufficient for HUD to1294identify waste, fraud, and abuse without further investigation.1295    Mr. Ozdinec--did I get that right?1296    Mr. Ozdinec. Yes, you did.1297    Mr. Loudermilk. Okay. Thank you. What impact do the current1298reporting requirements have on public housing agencies?1299    Mr. Ozdinec. In my view?1300    Mr. Loudermilk. Yes.1301    Mr. Ozdinec. Significant impact.1302    Mr. Loudermilk. Okay.1303    Mr. Ozdinec. They spend significant time complying with the1304regulations and this is coming from a former regulator.1305Complying with the regulations that the department puts out. I1306think this is every--every administration has a regulatory1307agenda, so it would be important to look at the Trump1308Administration's regulatory agenda here and see how it can help1309some of the things that Mr. Haller has talked about.1310    At the end of the day, will it help the financial burdens1311that housing authorities suffer from complying with? There1312are--the rules are enormous. For any of you that are1313interested, the national dashboard for the Section 8 program is1314available to the public, so you could see how your housing1315authority is doing related to the various component parts of1316the Section 8 program.1317    Mr. Loudermilk. Are these regulations modernized over time?1318I mean, we are looking at issues even with the Bank Secrecy Act1319where you got currency transaction reports of $10,000 which was1320established in 1972, which really would equate to $87,000 a1321day. We were really slow in modernizing our regulation from1322here, but you are saying that the housing regulations kept pace1323with technology and on pace with the current economy?1324    Mr. Ozdinec. No.1325    Mr. Loudermilk. They are not.1326    Mr. Ozdinec. Unfortunately, I--It breaks my heart to say1327it. We have underfunded public housing authorities and told1328them to keep up and they do. We have got a 70 billion dollar--1329arguably 70-billion dollar backlog of physical need.1330    We spend a lot of administrative money taking care of the1331compliance issues, rightly so but there is a cost to the1332system.1333    Mr. Loudermilk. Can we benefit from modernizing the1334regulations or tailoring the regulations?1335    Mr. Ozdinec. I believe so. I will be interested to see what1336this administration is proposing in their regulatory agenda. I1337think that they would like to do some work on SEMAP, which is1338the assessment tool for Section 8, and PHAS, which is the1339assessment tool for public housing.1340    The other thing that is a tool to the department is Section13416J of the act. Receivership is the death penalty for housing1342authorities and should not be taken lightly because it has1343cost--in addition to the cost of running an agency, it has1344costs associated with the receivership as well.1345    Mr. Loudermilk. All right. Thank you.1346    Mr. Schwartz, talking about modernization and technologies,1347how could the technologies and data management systems you used1348in the New York City Housing Agency help streamline compliance1349for public housing across the country?1350    Mr. Schwartz. Yes. Thank you for that question.1351    It made a big difference in working with the employees of1352NYCHA. We took the best of the engineers who did the work in1353the private sector and then they showed the NYCHA employees how1354they had all the data they needed to understand the problems,1355but they never understood how to use the data.1356    So the elevators improved; heating improved; training1357improved. Training is key to this, to all of these things.1358    If I might add just to the prior question, there are two1359kinds of compliance, really. There is regulatory and there is1360integrity. Integrity does not require a lot of money. You just1361have to live it and prove it and remind people. Regulatory is1362more expensive.1363    Mr. Loudermilk. Thank you for that. You make a good point1364because just in my own home State of Georgia, late last year a1365senior executive at Atlanta Housing Authority was arrested for1366steering Section 8 housing funds to herself and her family.1367That is not only illegal but yet it takes money and resources1368out of the hands of the people they are trying to protect.1369    Mr. Chairman, I yield back.1370    Chairman Meuser. The gentleman yields.1371    The gentlewoman from Michigan, Ms. Tlaib, is now recognized1372for 5 minutes.1373    Ms. Tlaib. Thank you, Mr. Chair.1374    Last year news broke that HUD was drafting a rule to impose1375time limits and work requirements on those who receive Federal1376housing assistance. I find this to be shockingly cruel. For a1377single mother working 40 hours a week and earning minimum wage,1378a voucher is the only thing standing between her children's1379two-bedroom apartment and homelessness.1380    In every State but one, she cannot afford rent with a full-1381time job. Currently more than 40 percent of housing choice1382voucher holders right now already fail to find a landlord that1383meets their needs and will accept their voucher.1384    So Mr. Oberdorfer, will not the imposition of time limits1385make it harder for voucher holders to secure housing since many1386private landlords would likely prefer a tenant who will not1387have to be replaced in the near future?1388    Mr. Oberdorfer. Yes. Thank you for that question.1389    There are agencies that have implemented work requirements1390and time limits, but it is always very dependent upon the local1391economy, local conditions. One of the biggest benefits of the1392housing choice voucher program is the stability that landlords1393have with the program, right? There is----1394    Ms. Tlaib. Do you think a landlord is going to leave the1395program because of this--I mean, we call it time limit but let1396us be honest. They are just going to let the stuff expire and1397then they have no way of getting paid.1398    Mr. Oberdorfer. Yes. The lack of consistency would make it1399less desirable to be a landlord for the program.1400    Ms. Tlaib. Also, will not the higher turnover vacancies1401make it harder for affordable housing developers to make1402projects pencil--pencil out, thereby deincentivizing investment1403in affordable housing that we desperately need right now in our1404country?1405    Mr. Oberdorfer. Yes. Again, when doing redevelopment for1406these affordable housing projects, that stable income coming1407from rent is critical and making sure that it is the right1408amount of stable is especially important to that.1409    Ms. Tlaib. And you know this. The majority of PHAs, I think1410the 19 PHAs right now--19 out of more than 3,000 that have1411tried to impose time limits later abandon these policies. Is1412that correct?1413    Mr. Oberdorfer. That is correct. One thing I would just add1414too is for the agencies that have done this, having additional1415funding for self-sufficiency programs to help families maintain1416childcare or get additional education, all of those----1417    Ms. Tlaib. They should check out my Economic Dignity for1418All package.1419    Mr. Oberdorfer. Yes. Very important, yes.1420    Ms. Tlaib. Mr. Oberdorfer, do you have any reason to1421believe that these barriers have disappeared?1422    Mr. Oberdorfer. No, I do not.1423    Ms. Tlaib. Have your members expressed concerns with the1424proposed changes to you directly?1425    Mr. Oberdorfer. What our members have expressed is that1426there needs to be PHA discretion to decide whether or not these1427changes would work for them. Again, we are seeing costs for1428rents continue to go up. We are not necessarily seeing costs of1429income for folks go up. So it does make a little bit of a1430challenge.1431    Ms. Tlaib. You know 81 percent of nondisabled HUD1432participants without young children were--81 percent were1433employed in the past year. Those who not working are typically1434attending school, providing care, or having a disability. Do1435you think, given that the vast majority of working age HUD1436participants are already employed, what kind of administrative1437burden will this impose on PHAs and owners right now?1438    Mr. Oberdorfer. That is a great question. There would be1439significant administrative burden for that mainly, again, from1440the compliance piece because you would need to check with all1441families to make sure whether or not they would fall under the1442requirements for the potential rule if they were provided a1443safeguard provision; all sorts of things that would need to be1444checked annually when doing all of the additional eligibility1445verification that agencies have to do. I think that goes back1446to the complexities of the regulatory compliance for these1447programs.1448    Again, I think it is critical that we are ensuring1449residents are safe and that agencies are being responsible1450stewards of taxpayer dollars, but we need to think about how we1451can streamline these programs in a way so that additional1452staffing can be used for actually serving the community as1453opposed to----1454    Ms. Tlaib. It is common sense to me. I mean, it is very1455clear this is not going to work.1456    When a handful of States imposed work requirements in1457Medicaid programs, Eric, thousands of people were erroneously1458kicked off the program because of paperwork issues and red tape1459despite the fact that they were actually working. Should we be1460worried about people accidentally losing their housing1461assistance despite meeting program requirements?1462    Mr. Oberdorfer. If there is a rule that moves into the1463final rule position, I would say yes. There needs to be1464safeguards put into place to make sure that does not happen and1465there needs to be the proper implementation timeline to ensure1466that those families are not--there are not families impacted1467that should not be.1468    Ms. Tlaib. Is this statement true, that this is not1469evident-based policymaking?1470    Mr. Oberdorfer. I would say when looking at the population1471that most of these programs serve, it is a small number of1472individuals that would fall under these requirements, so----1473    Ms. Tlaib. I am frustrated for your members, just so you1474know. I feel like we are constantly trying this stuff over and1475over again even though we have actual evidence that shows it1476does not work.1477    Mr. Oberdorfer. Yes. I know you mentioned this as well, but1478some of the information that has come from the Moving to Work1479agencies that have tried this, it is a really interesting read1480to see what it looks like when implemented on the ground.1481    Ms. Tlaib. Thank you. I yield.1482    Chairman Meuser. The gentlelady yields. The gentleman from1483Florida, Mr. Haridopolos, is now recognized for 5 minutes.1484    Mr. Haridopolos. Thank you, Mr. Chairman. Again, happy1485birthday to you, my friend. Great to see you.1486    I am going to keep--wide open question. You guys have1487answered very detailed questions but as a new member of the1488committee, what I want to get a general feel--I am going to ask1489Mr. Schwartz and Mr. Ozdinec about this as well if you do not1490mind.1491    Mr. Schwartz, you have been involved in this for over 301492years, and obviously you have an opinion about the direction in1493which HUD is going, and where you have seen the good, the bad,1494and the ugly, I would imagine, in those 30 years.1495    If you gave a piece of advice to the committee given on1496your vast experience--and I really like your focus on ethics1497that you discussed--what is the best thing that we could do on1498this committee to either empower Congress or those folks in the1499field who are trying to help out people with affordable1500housing?1501    What is the best thing we could be doing right now in1502Congress to change the dynamic for the better?1503    Mr. Schwartz. Thank you for that question.1504    My experience with NYCHA--public housing is not 30 years.1505It is really since I got involved with NYCHA, but it felt like150630 years.1507    It goes back to something I said before, drawing a1508difference between regulatory compliance and integrity1509compliance. The reason I go to that is because integrity1510compliance is not expensive. It is not--you do not have to1511throw money at integrity compliance. You have to be--you have1512to be a model. You have to talk about it. You have to create1513pride in the organization so that people want to do the work1514that they have.1515    I would say that HUD should have a code of conduct at every1516housing authority, whatever size that housing authority is.1517They should have programs that have to be followed so people1518understand what it means to be honest and they should punish1519when people are not being honest. You have to create that1520culture.1521    I do not know whether that is for--for frankly--for1522Congress--but certainly is for HUD, that HUD should take1523responsibility for that. When you do not pay attention to it,1524you are really sending the message that you do not care.1525    Mr. Haridopolos. Thank you. If I could do the same for Mr.1526Ozdinec, if you do not mind giving me your perspective, I would1527appreciate it.1528    Mr. Ozdinec. Thank you very much.1529    You know, there are going to be bad actors everywhere. You1530cannot legislate for stupidity or crime, and I feel badly about1531what the member just said about what was going on in Atlanta.1532To take that position you have to know--forget the code of1533conduct. You cannot take money, given the fact that you are in1534a position of authority and you are directing families to1535specific neighborhoods, I mean, the obviousness of that wrong1536you cannot legislate for.1537    So we can try to produce some regulations to prevent that1538from happening, or we can provide enforcement and oversight. I1539mean, I think those are your two choices to deal with that type1540of situation.1541    For every person like this example in Atlanta, there are 201542totally dedicated people in the industry who want to do the1543right thing, and it is complicated. It is hard work. I think1544Eric will attest to what his members deal with consistently,1545but you cannot legislate or regulate for crime. There needs to1546be some way to deal with that component part. When you get a1547bad actor, recognize it and do something----1548    Mr. Haridopolos. I mean, I am asking--you have been there1549for a while. I mean, you say there needs to be some way, so1550what is the way? You have been there for a while. What do you1551think is the way?1552    Mr. Ozdinec. I do not know the answer to that. I do not1553know the answer to bad actors. I know that in my career I dealt1554mostly with really good actors wanting to make a difference in1555their community. While they did not take a vow of poverty, they1556did not go out and use their position to engrandize themselves1557financially.1558    Mr. Haridopolos. Mr. Haller, do you have an opinion on this1559subject?1560    Mr. Haller. I think what I can offer, Congressman, is that1561the lack of accountability we have seen, not even just with1562PHAs but other, like, project-based rental assistance1563properties and things like that is--in the example I gave was1564the Bingham Square case that we filed, I mean, you are1565accepting taxpayer money for rent for these folks; and yet,1566they walk away from the project, completely abandon the1567property.1568    Buildings are burning down. The tenants are left to their1569own devices. What was the result? They filed bankruptcy. There1570was no real accountability for the individuals in that case. I1571liked the example that--I think it was Congressman Hill gave of1572an actual criminal prosecution. When that is appropriate, I1573think that is the only way you can make sure that folks----1574    Mr. Haridopolos. I yield back, Mr. Chairman. Thanks for the1575time.1576    Chairman Meuser. The gentleman yields back.1577    The gentleman from New York, Mr. Torres, is now recognized1578for 5 minutes.1579    Mr. Torres. Thank you, Mr. Chair.1580    Mr. Schwartz, in your testimony you rightly describe NYCHA1581as an irreplaceable asset for the city of New York. I worry you1582were invited to testify not to underscore the irreplaceable1583value of public housing but to discredit and de-legitimatize1584public housing so that it is no longer seen as the1585irreplaceable asset that it is and I worry that there are1586cynical critics of public housing who could easily seize upon1587your words to present a profoundly distorted and1588decontextualized view of NYCHA.1589    My first question: Do you think the Federal Government has1590historically treated NYCHA as the irreplaceable asset that it1591is?1592    Mr. Schwartz. I do not know if that is a question for me,1593really, to----1594    Mr. Torres. You have no opinion on the funding levels of--1595--1596    Mr. Schwartz. I have an----1597    Mr. Torres. Let me make it more concrete. The latest1598appropriations bill passed by Congress cuts funding for NYCHA1599by 14 percent, which translates into the loss of $100-million.1600Do you think a 14 percent, 100 million dollar loss is an1601example of the Federal Government treating public housing as an1602irreplaceable asset?1603    Mr. Schwartz. I do not think that is a fair question for1604me, and I--but----1605    Mr. Torres. You were the monitor for public housing for 51606years.1607    Mr. Schwartz. And I----1608    Mr. Torres. Funding is clearly relevant to the operation of1609public housing.1610    Mr. Schwartz. I wanted to be the monitor because I think1611NYCHA and public housing authorities are so important.1612    Mr. Torres. Your secretary, Scott Turner, denies that NYCHA1613has a funding crisis despite knowing nothing about public1614housing. Do you acknowledge that NYCHA has a funding crisis?1615    Mr. Schwartz. Yes, I think there is a funding crisis. The1616question is why is there a funding crisis.1617    There are many aspects to it----1618    Mr. Torres. Which level of government is the primary1619funding source for public housing?1620    Mr. Schwartz. Well, I think the initial level is the public1621authorities themselves and----1622    Mr. Torres. It is the overwhelming source of funding for1623public housing.1624    How much capital funding does NYCHA receive annually?1625    Mr. Schwartz. I forget now. I forgot the number. It is a1626huge number.1627    Mr. Torres. 700 to $800 million. Do you acknowledge that1628NYCHA has an aging portfolio?1629    Mr. Schwartz. Has an aging portfolio? It definitely has an1630aging----1631    Mr. Torres. And what is the--do you know the age of the1632oldest building in the NYCHA portfolio?1633    Mr. Schwartz. The oldest building?1634    Mr. Torres. Yes.1635    Mr. Schwartz. Is about 65 years.1636    Mr. Torres. Longer; 91 years. NYCHA dates back to 1935.1637    Do you know how many boilers are in NYCHA's portfolio?1638    Mr. Schwartz. Any----1639    Mr. Torres. Boilers. The number of boilers in NYCHA's1640portfolio.1641    Mr. Schwartz. Boilers are a very interesting subject, as I1642think we both know----1643    Mr. Torres. No, I am asking do you know the number of1644boilers in NYCHA's portfolio?1645    Mr. Schwartz. Oh. They have 2,300 buildings. Not every--1646some buildings have shared boilers, but there are 2,3001647buildings----1648    Mr. Torres. So, the answer is----1649    Mr. Schwartz [continuing]. on 300 campuses.1650    Mr. Torres. The answer is 755 boilers. Would you agree that1651replacing an aging portfolio of 755 boilers is a massive and1652expensive undertaking?1653    Mr. Schwartz. It is. One of the big concerns is how it got1654into the position that it is in.1655    Mr. Torres. I want to go to elevators. NYCHA has 3,0441656elevators. Would you agree that replacing an aging portfolio of1657over 3,000 elevators, again, is an expensive and massive1658undertaking?1659    Mr. Schwartz. We looked at it, and we are not sure that1660there is an industry that can provide that number of elevators1661when they are needed.1662    Mr. Torres. I get the basic point. Roofs. NYCHA has 1,7641663roofs. Again, replacing a portfolio of over 1,700 roofs is a1664massive and expensive undertaking. NYCHA is managing property1665on a scale that is unprecedented in the history of our country.1666There is no analog to the New York City Housing Authority.1667    In order to operate a property effectively, a property1668owner needs predictability and funding, yet funding for public1669housing is anything but predictable. Funding for NYCHA is1670subject to the whims of congressional appropriations which vary1671widely from year to year. As you know, NYCHA does not receive1672100 percent of the formula funding for which it is eligible. It1673only receives a fraction of its formula funding. What is the1674lowest prorated level of funding that NYCHA has received since16752001?1676    Mr. Schwartz. I do not know.1677    Mr. Torres. It is 82 percent. So, suppose you are a private1678landlord, and I were to tell you are only going to receive 821679percent of the revenues that you expected to receive in the1680midst of rising expenses, rising taxes, rising water and sewer,1681rising utilities. Would you experience that as destabilizing?1682    Mr. Schwartz. There would be a very difficult operation----1683    Mr. Torres. So, it seems like that is relevant context in1684which to have a conversation about the management of public1685housing.1686    Mr. Schwartz. You also look----1687    Mr. Torres. I rest my case. My time is expired.1688    Chairman Meuser. The gentleman yields.1689    The gentleman from New York, Mr. Garbarino, is now1690recognized for 5 minutes.1691    Mr. Garbarino. Thank you, chairman. Thank you all, the1692witnesses for being here. I just was smiling--the previous1693questioner--and he talks about the funds and NYCHA not being1694funded properly and only getting certain amount that it is1695entitled--but Democrats in New York, what they have done to1696private landlords under rent regulation and the lack of money1697that they are going to be able to recoup through investment and1698rents and--they are going to be falling in disrepair.1699    They are going to actually look like NYCHA properties1700through actions by the State legislature and the New York City1701Council but they will not talk about that. Rent regulation is a1702great thing, but when the funding is needed--Mr. Schwartz, is1703NYCHA's problem a funding problem?1704    Mr. Schwartz. It is a complicated problem but the reason--1705one of the reasons NYCHA is in the position it is in now is1706that it did not care for the facilities that it had. It did not1707train people. It did not--they do not maintain--the oldest1708heating system in the NYCHA portfolio is about 65 years old,1709and it is still working beautifully today--or it was when I1710left in 2019. It was working beautifully because the1711maintenance people at that particular facility took care of it.1712    Mr. Garbarino. Facility, right? I mean, because the reason1713you were there is because HUD, Southern District of New York,1714NYCHA, and the city of New York came to an agreement to put you1715there because of its unacceptable living conditions, including1716mold exposure, elevator outages, and unreliable heating and air1717conditioning, correct?1718    Mr. Schwartz. Yes, and without plans to fix it. They did1719not have an approach and what we did was build an approach in1720each of those areas. As I said, despite the corruption, despite1721the other problems, there were important successes.1722    Seven thousand fans on buildings and cleaning the vents,1723vents that had not been cleaned for 60 years--I do not even1724know if you could call them vents after 60 years. NYCHA put1725together a team that did that job on budget, on time, and both1726complaints were down 50 percent in those buildings.1727    So they had--if they direct it correctly, if they use the1728analytics, if they have a plan you can get things done.1729    Mr. Garbarino. I am a supporter of housing authorities. My1730love for my--my family love for them was represented by the1731Islip Town Housing Authority, and they did great work. They1732still continue to do great work. So I am not saying but you1733talk--we heard from the previous member, and you talk about the1734number of buildings under NYCHA's control.1735    You mentioned there are--people who manage some of the1736buildings know what they are doing but there are other people,1737bad actors or corruption--I mean, those cases are true. There1738were a lot of people that pled to stealing money from NYCHA, so1739there was obviously corruption going on there.1740    When you need this housing for people, when you need honest1741living conditions and there is Federal tax dollars going that1742way, when is--okay, some building managers do a good job; some1743building managers do not do a good job. When do we hit that1744element where there are so many people living here, there is so1745much money being spent here, nothing seems to be getting--1746specific example.1747    There was a--in November of last year, there was an1748explosion by a--there was a--the building partially collapsed1749on Alexander Avenue because of an explosion in a boiler room.1750Nobody was hurt, thank God, but 84 residents were displaced and1751that boiler issue had been--that issue had been known since17522018.1753    When do situations like this all of a sudden say NYCHA as a1754whole with these building--with the individual building--some1755doing good, some of them not doing good, when does it all of a1756sudden say, okay, HUD or somebody else needs to take over?1757    I mean, there is--the original plan for the oversight with1758which you had was for 5 years. So much stuff was not addressed.1759It has to continue.1760    When is enough time enough time, and we have to change what1761we are doing?1762    Mr. Schwartz. I do not know any precise answer to that, but1763there was a combination you can do. One of the ways we improved1764the heating at NYCHA is to have outside contractors maintain1765the facilities rather than having NYCHA employees do it. The1766record shows private sector, they took care of the maintenance,1767and the operation worked more effectively.1768    Mr. Garbarino. I am sorry to cut you off. My time is out.1769Maybe we should get you back over there to manage things1770because it sounds like you have some good ideas.1771    Chairman Meuser. The gentleman from New York yields.1772    The gentleman from Texas, Mr. Green, the ranking member of1773the Subcommittee on Oversight and Investigations, is now1774recognized for 5 minutes.1775    Mr. Green. Thank you, Mr. Chairman. I thank the witnesses1776for appearing as well.1777    I am concerned. Mr. Oberdorfer, the Fiscal Year 20261778appropriations package that passed the House last week cut1779over--overall public housing funding by nearly $500 million1780compared to 2025, including a nearly 15 percent cut to the1781public housing operating fund that allows PHAs to administer1782the program.1783    I have a question for you, sir: HUD was formed in 19651784under the leadership of the Honorable John F. Kennedy, may he1785rest in peace, has HUD or this particular fund, the operating1786fund, ever been overfunded?1787    Mr. Oberdorfer. Thank you for that question.1788    When looking at historical levels for the operating fund,1789usually it is around 85 to 90 percent or so prorated, meaning1790that for every dollar an agency should get, it gets about 851791cents to $1.00.1792    During the pandemic, there was one spot where it went1793higher than 100 percent, but that was also just because of the1794extenuating circumstances that came from that. So historically,1795no, that fund has never been funded at the amount that was1796determined necessary to be funded by the Federal Government.1797    Mr. Green. Is that a very polite way of saying it has never1798been overfunded?1799    Mr. Oberdorfer. Yes.1800    Mr. Green. Let us move to another point in this. How has1801the lack of funding impacted the agency's ability to provide1802services and maintain properties?1803    Mr. Oberdorfer. That is a great question. I think I always1804think about it this way when I am talking to folks about the1805challenges that come from the funding levels that have been1806seen by the public housing both operating in capital fund.1807    One, if you think about having an issue with your roof1808where you know you need to go in and fix that, but you do not1809have all of the money necessary to go in and do that, you can1810put a temporary fix on it to have it solved. That costs less1811but we know it does not make the issue go away. In a year's1812time, that is only going to increase the amount of cost to fix1813that issue.1814    I think we have seen that happen a lot at agencies who are1815working very hard to make sure those units are as safe as1816possible for their residents but have to deal with the1817difficult reality that they are receiving 85 cents to every1818dollar that was determined by the Federal Government to help1819them with the day-to-day maintenance of those programs.1820    Then with capital fund needs for larger modernization1821projects we have seen the highest amount of funding for that at18223.2 billion but there was a report that came out all the way1823back in 2010 that identified PHAs needed at least 3.4 billion1824per year to maintain all of their capital needs.1825    Two thousand ten dollars are very different from two1826thousand twenty six dollars. Even though we have seen the1827number of units decline in the public housing program, we have1828never seen those costs keep pace.1829    So again, we are putting temporary fixes on things to make1830sure those units are safe but adequate and full funding is1831necessary to make sure that agencies are able to adequately1832maintain those properties so that we do not run into additional1833issues down the line.1834    Mr. Green. Let us move to the housing choice vouchers. Has1835this program ever been overfunded?1836    Mr. Oberdorfer. So, with the housing choice voucher1837program, there are two accounts. There is a housing assistance1838payment which is the rent that goes to tenants. Typically, we1839see that at close to full funding. I would want to point out1840the second account which is the housing choice voucher1841administrative fee.1842    That is the funding that agencies use to help folks get1843leased up, to help them manage their programs, make sure they1844are in compliance, make sure proper oversight is done.1845    When looking at the admin fee, we have not seen full1846funding for that since 2003. In fact, in the Fiscal Year 20261847bill that just passed, it would put it at about 82 cents for1848every dollar that the administrative fee formula determines1849agencies would need to run their voucher programs.1850    Mr. Green. I find it quite interesting that the programs1851are underfunded, and someone has concluded that the solution is1852to underfund. Programs need additional funds, then get them but1853then the solution becomes, well, let us cut. Let us cut the1854programs. Let us cut the funds. I do not comprehend the logic.1855I yield back.1856    Chairman Meuser. The gentleman yields.1857    The gentleman from Nebraska, Mr. Flood, the chair of the1858Subcommittee on Housing and Insurance, is now recognized for 51859minutes.1860    Mr. Flood. Thank you, Mr. Chairman.1861    First I would like to thank you for having this important1862hearing today. It is essential that we use our oversight1863responsibility in this committee to ensure PHAs are living up1864to their mission and utilizing taxpayer dollars appropriately.1865    In New York City and Atlantic City, we have seen evidence1866of rat infestations, and in Indianapolis and Omaha we have1867heard reports of bed bug infestations.1868    Mr. Haller, can you please speak to the pest and vermin1869infestations that you have seen in Indiana and explain why it1870took so long to resolve those issues?1871    Mr. Haller. Unfortunately, Indianapolis is one of the1872hotspots for bed bugs. You are correct there. They are very1873difficult to treat and very expensive. So that is one aspect of1874it. We saw rodents as well. That tends to correspond with not1875having enough trash removal. Services are allowing trash1876compactor systems to get backed up and things like that.1877    Again, I think when it comes to regular maintenance, making1878sure those very basic things are done right, including1879preventative treatments on a regular schedule, that is how you1880ultimately prevent those situations from getting out of1881control.1882    Mr. Flood. My second question, Mr. Haller. Your written1883testimony references the need for stronger inspection1884standards. However, we were hearing concerns that the New1885Albany Housing Authority instructed maintenance workers to do1886shoddy fixes in an attempt to actively mislead inspectors. Can1887you commit to having your office look into these allegations?1888    Mr. Haller. Congressman, I would very much appreciate if1889you would share that information with us, and we would be happy1890to correspond with you about that.1891    Mr. Flood. Appreciate that.1892    One common issue we have seen with PHAs is that boards and1893senior executives often have no experience in real estate,1894property management, or the like. These are political patronage1895jobs, and they sometimes have no business running a PHA.1896    Mr. Ozdinec, can you describe how having experienced boards1897and senior execs impacts the quality of services provided by1898PHAs?1899    Mr. Ozdinec. Yes. Thank you for the question.1900    That was one of the goals of the HOPE VI demonstration in1901the early 90s, was to increase the level of sophistication of1902executive directors and their understanding of the real estate1903processes and principles in the private market.1904    Housing authorities had up until that period of time never1905had to worry about how to administer and manage public housing1906the way everybody else does with reserves, understanding you1907had to collect enough rent to cover your expenses, the basic1908principles of property management.1909    I think we made great strides with HOPE VI and in raising1910level of sophistication of executive directors and their staff1911to understand how private multifamily property managers manage1912their portfolios and to use the best that is available for1913their own operations.1914    Mr. Flood. Mr. Schwartz, do you believe that property1915managers should have relevant experience and how important is1916that?1917    Mr. Schwartz. I think it is important--one of the1918recommendations we made to NYCHA which they adopted was to1919separate the job of chairman and CEO so that--we looked to the1920chairman to be the person, really, the Mr. Outside or Ms.1921Outside, to deal with the agencies, and then the CEO to be the1922operational person. It was not--it was too much for one person,1923especially at a--size of NYCHA.1924    The other thing we recommended is that--and this is one of1925the few things that I recommended that actually cost money but1926I recommended that the board should have a budget and that the1927members of the board should have the opportunity to engage1928specialists and to help them as they look at the1929decisionmaking, whether they need an architect or an engineer--1930--1931    Mr. Flood. Sure.1932    Mr. Schwartz [continuing]. something to help them make an1933educated decision.1934    Mr. Flood. So yesterday myself along with Chairman Meuser1935and Chairman Hill sent letters to 32 PHAs designated as1936``troubled'' by HUD, including the OHA, requesting information1937on how they ensure the physical safety and financial1938sustainability of their properties. I do not have much time1939here.1940    Mr. Schwartz, Well each PHA is different, what are some of1941the best--briefly--best practices that people can--that PHAs1942can implement to quickly respond to residents' needs and abate1943hazards? To the extent I only have 17 seconds left, I would ask1944that you answer that question on the record with the help of1945committee staff.1946    With that, I yield back.1947    Chairman Meuser. The gentleman yields.1948    I would like to thank all witnesses for your testimony1949today. Without objection, all members will have 5 legislative1950days to submit additional written questions for the witnesses1951to the chair. The questions will be forwarded to the witnesses1952for their response. Witnesses, please respond no later than1953March 17, 2026.19541955    [The information referred to can be found in the appendix.]19561957    This hearing is adjourned.19581959    [Whereupon, at 3:46 p.m., the subcommittee was adjourned.]19601961                                APPENDIX19621963                              ----------19641965                   MATERIALS SUBMITTED FOR THE RECORD1966[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]19671968                                 [all]