6/12/25, 5:22 PM Transcript

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Committee on Financial Services Slate, other, U.S. House Committee on Financial Services

[Beginning Shortly]

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On-Screen Graphic, other, House Committee on Financial Services

Committee on Financial Services. Chairman French Hill. Beginning Shortly. Jun 12, 2025. Room 2128.
[House Committee on Financial Services Seal]

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On-screen Graphic, other

[Committee on Financial Services, Chairman French Hill, Beginning Shortly, Jun 12, 2025 01:26:04 PM,
Room 2128 graphic displayed]

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Chairman Mike Flood (R-NE-01)

Call the witnesses to take their seats. We'll be gaveling in shortly.

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On-screen Graphic, other

[Beginning Shortly graphic displayed]

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Chairman Mike Flood (R-NE-01)

The subcommittee on Housing and Insurance will come to order. [Gavel] Without objection, the chair is
authorized to declare a recess of the committee at any time. This hearing is entitled Housing in the
Heartland: Addressing Our Rural Housing Needs. Without objection, all members will have five legislative
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days within which to submit extraneous materials to the chair for inclusion in the record. I now recognize
myself for five minutes for an opening statement. First of all, I'd like to thank our witnesses for being
with us today and I very much look forward to hearing your testimony on the topic of housing in rural
America. Thank you for coming 30 minutes early given the House's schedule today. So far this year, we
have focused this subcommittee's work on the rising cost of housing in America. We've spent our
hearing in March focusing on the underlying driving force behind the problem, and that is a lack of
housing supply. In May, we had an opportunity to examine some of the alternate building methods that
can bring supply online for less cost, like manufactured housing, modular housing, and even early stage
experiments with 3D printing homes. Today, we are going to dig into the challenges with building
housing in rural America. The problems in the rural parts of our country are a little different than those
that we see in the urban areas. While a rural area may have lower land costs, the logistics associated
with getting homes built in rural areas can introduce some unique challenges that drive up costs, such
as: it's more expensive to transport building materials to a remote part of the country. Longer supply
chain means more cost, and those costs are often passed down to the home buyer or the renter. Rural
areas may have less contractors and subcontractors nearby to do the work needed to build the home.
Labor shortages can lead to expensive delays on a project or even stop projects altogether when an area
simply doesn't have the experts needed to do the work at all. Alternatively, it can mean bringing labor in
from further away from the project site, which contributes higher labor costs overall. Again, these costs
are passed down to the homebuyer or the renter. However, as we examine what drives costs in rural
housing markets, we'll also see some common themes that we've already discussed in this
subcommittee that will reemerge, namely regulatory burdens from the federal government that often hit
smaller communities with less resources the hardest. Through my work so far in Congress, I have
identified four key cost drivers in federal housing projects. I call them the four horsemen of the housing
apocalypse. Number one, environmental review requirements that delay a project start and drive up
cost. Number two, Build America, Buy America requirements that drive up the cost of critical
construction materials and appliances, sometimes 20, even 40% more than otherwise necessary. Davis
Bacon requirements that, from what I've heard, are much more costly due to the associated reporting
requirements than they are for the actual cost of paying prevailing wages. And number four, section
three requirements that make it more difficult to find contractors to do the job, particularly in rural areas
with some of the workforce challenges that I mentioned. While many of these requirements are well
intentioned, their combined impact significantly drives up costs of projects using federal dollars. I look
forward to hearing from our witnesses about both the challenges that are unique to rural housing
markets and how some of those common federal regulatory challenges affect projects in rural areas.
Finally, this hearing will also serve as an opportunity to explore the impact of federal rural housing
programs like the USDA's Rural Housing Service. The RHS operates programs under Title five of the US
Housing Act of 1949. The Section 515 program provides affordable housing rental housing for low
income families, the elderly, and people with disabilities. The section 538 program provides financing to
increase the supply of rural housing for low and moderate income people, and the section 502 program
that makes direct loans to low income borrowers to rehabilitate or purchase a primary residence.
Ranking member Cleaver has a draft bill noticed to this hearing that would make some changes to these

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programs, which I'm sure will be a subject of discussion today with our witnesses and our members. I'm
excited to dig deeper into each of these issues today, and I look forward to our witness's testimony. With
that, I yield back. The chair now recognizes the ranking member of the subcommittee, Mr. Cleaver, for
five minutes for an opening statement.

00:18:03 - 00:22:04

Ranking Member Emanuel Cleaver (D-MO-05)

Thank you, Mr. Chairman. And I also want to thank you for giving a great deal of your your time to this
and other issues related to contemporary housing problems. I represent the Fifth District of Missouri,
and my congressional district includes Kansas City, Missouri and the surrounding metropolitan area.
Before redistricting, I spent nearly two decades representing a district that stretched from Kansas City,
Missouri in the Far West to a city called Slater, Missouri near the center of the state. Slater is a very
small town of 2,000 that unless you are a diehard fan of Steve McQueen, the king of cool, and know
about the trivia and his birthplace, you probably never heard of Slater. I spent a lot of time in rural
America, having been born there in Texas, but rural America is home to 20% of the United States
population and growing and covers more than 90% of the US land mass. A lack of new construction,
limited investment in existing housing stock, and economic constraints are driving a shortage of safe
and decent housing in rural America. Over one-third of rental units in rural America are at least 55 years
old. Preserving and increasing housing supply in rural areas is a formidable challenge, but possible.
Many small rural communities face higher construction and material costs, struggle to access private
financing and philanthropic support, and lack the capacity to navigate the complexities of federal
programs. Many are also at risk of a disproportionate loss of housing stock following extreme weather
events and other natural disasters. Affordable housing is critical infrastructure for rural communities,
and I look forward to working with the Chairman and members of this subcommittee to address the
challenges facing rural housing. following extreme weather events. Strong public investment and public
and private partnerships are now needed. Uh, Chairman Flood and I uh spent time this week exploring
ways that HUD's home investment partnerships program can better be tailored for increasing supply in
smaller and rural areas. In addition to HUD, rural development programs through the USDA are
specifically designed to address the unique challenges in USDA eligible areas. I thank Congressman
Nunn for working with me on the Rural Housing Service Reform Act, which would improve federal
housing rural programs through USDA. This bill includes my strategy and investment Rural Housing Act,
which would preserve existing housing, build new housing, and prevent unnecessary housing instability.
For many communities, these USDA supported housing units constitute, rather, the only affordable rental
housing available. These are low income veterans, disabled individuals, and fixed income persons who
need help and no other housing is there available. At the same time, the administration's cut to USDA
rural development staff are having a detrimental impact. Office closures and dramatic staff reductions
do not create efficiency, they create a backlog. I'm hearing concerning reports of degraded services and
impact programs at USDA, uh are happening almost daily. The president has further proposed a $600
million cut to USDA rural development and proposed to eliminate or reduce nearly every rural housing

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program. This includes section 502 direct loan program, which has helped more than 2 million uh
individuals, uh in low income rural families achieve homeownership. I will continue to work with my
Democratic and Republican colleagues to find productive solutions to rural challenges. Thank you, Mr.
Chairman.

00:22:07 - 00:22:48

Chairman Mike Flood (R-NE-01)

Thank you, Ranking Member Cleaver. Today, we welcome the testimony of Mr. Richard Baier, the
president and CEO of the Nebraska Bankers Association, Mr. David Garcia, the policy director at Up for
Growth, Mr. Ian Maute, director of development at the Buckeye Community Hope Foundation, testifying
on behalf of the Council for Affordable and Rural Housing, and Mr. David Lipsetz, the, president and CEO
of the Housing Assistance Council. We thank each of you for taking the time to be here. Each of you will
be recognized for five minutes to give an oral presentation of your testimony. Without objection, your
written statements will be made part of the record. Mr. Baier, you are now recognized for five minutes for
your oral remarks.

00:22:55 - 00:25:04

Mr. Richard Baier, President and Chief Executive Officer, Nebraska Bankers Association

Good afternoon, Mr. Chairman, Ranking Member Cleaver, and members of the subcommittee on housing
and insurance. My name is Richard Baier. I am president and CEO of the Nebraska Bankers Association.
Prior to that, I spent almost nine years as head of economic development for the state of Nebraska
where I was responsible for the state's affordable housing program. Maybe just as relevant to today's
discussion, I also grew up in the small, rural Kansas town of La Crosse, which has a population of 1,266
people. Fortunately, Nebraska has had one of the lowest unemployment rates in our country for more
than a decade. Conversely, many of our rural counties, peak population was prior to 1960. Growing
employers in rural parts of our state of Nebraska routinely cite a lack of workforce housing as a reason
that they are unable to grow jobs. When evaluating uh the housing market in states like Nebraska, one
factor that we often look at is the age of our housing stock. Recent research conducted by the Nebraska
Investment Finance Authority notes that 19% of Nebraska's housing units were constructed before 1939.
When the data is broken down even farther via the rural-urban continuum code, the data highlights that
28 to 36% of homes in Nebraska's most rural counties were built prior to 1940. Quite simply, rural
Nebraska's housing stock, like that in other areas of the country, is past retirement age. There are a
number of unique challenges which limit the ability of rural areas to maintain and build new housing. A
majority of the homes currently being built in our rural areas of Nebraska are large custom homes, which
carry a very hefty price tag. Unfortunately, there is a clear lack of housing to accommodate our working
families. While it may seem counterintuitive to some, costs for building new housing units in rural areas
are substantially higher when compared to similar units in urban areas as referenced by Congressman
Flood. These cost differences are driven by a myriad of economic and market... Fundamentally,
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Nebraska, like other rural areas of our great country, lacks supplies of material vendors, contractors, and
subcontractors necessary to build new housing units.

00:25:15 - 00:25:15

Unknown Speaker, unknown

Finally, there are very few buildable lots or developers who are willing to take on the substantial risk
associated with building housing units in rural areas.

00:25:25 - 00:27:54

Mr. Richard Baier, President and Chief Executive Officer, Nebraska Bankers Association

In most cases, the only way to build housing available housing lots is through public private partnerships
often driven by local units of government. While well intentioned, use of our existing government
housing programs is severely limited because of differing rules and regulations, varying definitions,
mismatched application cycles, and inconsistent qualifying income thresholds. As an example, federal
rules currently limit the Low Income Housing Tax Credit program to projects which services individuals
with incomes below 60% of the area median income. Conversely, the National Housing Trust Fund is
limited to those potential tenants with incomes below 30% of AMI. Rural housing developers to be
successful routinely layer or stack these various programs to make their projects economically feasible.
I have one regional developer that I know that estimates that the administrative burden of layering these
various programs adds at least 20% to the overall cost of construction. Current government housing
programs also have substantial administrative and reporting burdens as mentioned by Congressman
Flood that such as lengthy and expensive environmental assessments. In response to input from
member banks, the Nebraska Bankers Association created our rural work work rural workforce housing
task force in 2015, focused on finding new solutions to our state's rural housing crisis. The most notable
solution resulting from this task force was the creation of our rural workforce housing investment fund,
which was passed and signed into law by then governor and now Senator Pete Ricketts in 2017. Our
fund provides state matching grants to local not for profit developers in counties with less than 100,000
inhabitants with a focus directly on creating new owner occupied and rental housing units. This fund
uniquely does not have income restrictions, but rather, limits projects by the unit cost of construction.
One unique caveat of the rural workforce housing fund is that grant recipients cannot use any other
federal housing programs, thus restricting the limits that might be placed on these projects. To date, the
state of Nebraska has had awarded more than $59 million in grants, which have been matched by $36
million in local funds. Our member banks have contributed most of those dollars, and today we've seen
331 new owner occupied units, 655 rental units, and 670 units currently under construction. Thank you
for the opportunity to appear before you today, and I look forward to our dialogue.

00:27:59 - 00:28:00

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Chairman Mike Flood (R-NE-01)

Thank you, Mr. Baier. Mr. Garcia, you are now recognized for five minutes for your oral remarks.

00:28:05 - 00:32:44

Mr. David Garcia, Policy Director, Up for Growth

Thank you, Chairman Flood, Ranking Member Cleaver, and the rest of the subcommittee for the
opportunity to appear today to discuss the urgency of the nation's rural housing crisis. So my name is
David Garcia. I'm the policy director at Up For Growth and Up For Growth Action. We are a nonprofit,
nonpartisan organization focused exclusively on increasing the supply of housing across the country.
We have over 350 member organizations nationwide, which includes builders, advocates, and national
trade associations, many of whom actively build in rural communities, including members such as
Habitat for Humanity of Lincoln, Nebraska, the Minnesota Housing Partnership, and the Homelessness
and Housing Coalition of Kentucky. Today, my remarks will describe some of the unique challenges
facing rural communities, their causes, and the potential solutions for housing. Nationally, we estimate
that the country is missing 3.79 million homes, which is a significant shortfall that is spreading to other
areas of the country that have been previously considered affordable. Rural communities, as stated
earlier, they're home to 60 million people or one in five residents, and an increasing number of those
people are becoming overwhelmed by trying to pay the rent or afford a home. An estimated 44% of rural
renters are cost burdened, and half of those renters are considered severely cost burdened. And buying
a home has become more difficult as well. In the three years following the pandemic, home prices in non
metro areas grew by about 36%, which is much higher than in urbanized areas. And these trends have
not gone unnoticed. Recent polling shows that 80% of rural residents believe that housing affordability is
deteriorating, and 76% agree that America faces a significant housing shortage requiring immediate
attention and increased housing construction. A persistently high poverty rate in rural areas can
exacerbate these challenges. More than one in five or 22% of rural households report an annual income
below $25,000 compared to 18% nationwide. While the cost of living is comparatively lower in rural
communities at times, lower wages can make it more difficult for residents to keep up with rising costs,
make it harder for new housing development to pencil out, especially when considering the need to
upgrade infrastructure such as water, sewer, power, and as well as roads. comparatively lower in rural
communities at times. Uh, lower wages can make it more difficult for residents to keep up with rising
costs, make it harder for new housing development to pencil out, especially when considering the need
to upgrade infrastructure such as water, sewer, power, and as well as roads. Many rural communities
also lack the capacity to approve and plan for new homes. In many places, there may be just a single
planner to review applications, ensure compliance with community rules, and issue permits. This lack of
capacity also means that the hard and expensive work of updating zoning and land use rules are out of
reach for many communities. Homebuilding in rural America can be more expensive as noted, uh,
already a couple of times, given the high cost of delivering building materials to rural construction sites
and the lack of economies of scale given the smaller size of many rural developments. Sourcing

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construction labor, uh contractors, uh, and and other labor is also difficult, which obviously, in turn,
increases cost. While these challenges are mostly unique to rural America, we also find that other
obstacles are similar to those in larger cities. So for example, restrictive zoning can limit the
construction of different types of housing, such as manufactured housing or accessory dwelling units.
Local opposition to new housing, which we commonly refer to as NIMBYism, can stall, shrink, or even
halt new housing altogether just as it does in urban areas. Thankfully, there are bipartisan solutions that
Congress can act on. Critical funding sources such as the 30% basis boost for rural housing projects
proposed in the Affordable Credit Improvement Act can accelerate construction and preservation of
homes. In addition, the Rural Housing Service Reform Act would bolster USDA's affordable housing
programs, while the Neighborhood Homes Investment Act would incentivize homeownership through
the rehabilitation of existing stock for moderate income homebuyers. And the Road to Housing Act
includes a provision to eliminate the HUD permanent steel chassis rule for manufactured housing, which
would greatly reduce costs on the construction of an important housing solution for rural America.
Congress can also address the capacity gaps I mentioned earlier through targeted assistance through
programs like those proposed in the Housing Supply and Frameworks Act and provide policy support in
the to be introduced housing opportunities made easier act, both of which are crucial to enabling rural
communities to modernize outdated zoning and streamline and ramp up housing production. And so all
of these proposals enjoy bipartisan support, including from members here today, such as Chairman
Flood, ranking member Cleaver, uh, member Pettersen. You know, such partnerships really offer us an
opportunity to work together to deliver affordable, quality, and safe housing to all Americans from the
most rural towns to the largest cities. And so I wanna thank you again for the opportunity to contribute
to today's hearing. I look forward to continued dialogue with this subcommittee.

00:32:45 - 00:32:50

Chairman Mike Flood (R-NE-01)

Thank you, Mr. Garcia. Mr. Maute, you are now recognized for five minutes for your oral remarks. [Gavel]

00:32:51 - 00:37:58

Mr. Ian Maute, Director of Development, Buckeye Community Hope Foundation, on behalf of the
Council for Affordable and Rural Housing (CARH)

Thank you. Chairman Flood, ranking member Cleaver, and members of the committee, on behalf of the
Council for Affordable and Rural Housing, known as CARH, we appreciate the opportunity to submit
testimony to the committee. This statement outlines key issues impacting the rural multifamily housing
industry and provides recommendations that will strengthen the federal programs that preserve and
expand affordable rental housing, as well as bring additional capital to increase the housing stock in
rural communities across the country. CARH is an industry trade association with headquarters in
Alexandria, Virginia, representing the interest of for profit and nonprofit developers, owners,
management companies, lenders, and investors who all participate in the affordable rental housing
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industry in rural America. My name is Ian Maute. I am the director of development for the Buckeye
Community Hope Foundation based in Columbus, Ohio. We are a nonprofit corporation that develops
and facilitates affordable housing for low income families. I'm also the current president of CARH.
Throughout rural America, there continues to be an overwhelming need for both affordable and decent
housing. The lack of affordable housing reflects limited investments in these localities. Rural renters are
more than twice as likely to live in substandard housing compared to people who own their homes. With
lower median incomes and higher poverty rates than homeowners, many renters are simply unable to
find decent housing that is also affordable. While the demand for rental housing in rural areas remains
high, the supply particularly of new housing has decreased. Neither the private nor public sector can
produce affordable rural housing independently of the other. It needs to be a partnership. The United
States Department of Agriculture's Rural Development or RD, section 515 rural multifamily housing, and
section 514 farm labor multifamily properties are essential for addressing affordable rural housing
needs. Rental assistance or RA under the section 521 program is essential for many families and elderly
households residing in rural America. At the same time, most federally supported multifamily properties
are over 35 years old and need modernization. These properties have suffered from federal funding
shortages and statutory and regulatory barriers that make recapitalization either difficult or impossible.
Over the next decade, as many as three quarters of all section 515 mortgages will mature and with it
and with it the end of the section 521 rental assistance contracts, straining over 250,000 families, elderly
persons, without the ability to house themselves. Section 521 rental assistance contracts. This would
mean ending over 250,000 families, elderly persons, uh, without the ability to house themselves. Under
current law, when a Section 515 mortgage expires, the Section 521 RA also expires. Therefore, it's
critical to establish legislative authority to preserve the rental assistance after mortgage maturity. With
roughly 75% of RD properties depending on Section 521 RA, this program is a financial backbone of rural
housing. The final appropriation legislation for Fiscal Year 2024 contains language that provided RD with
authority to structure a demonstration program that decouples RA from the Section 515 program for
1,000 units in properties where the mortgage was set to expire in Fiscal Year 2024. CARH worked
closely with RD on the implementation of the decoupling program, which is also known as standalone
rental assistance or SARA. The Fiscal Year 2025 continuing resolution authorized 1,000 units eligible for
decoupling in the current fiscal year. We are very encouraged by the strong and growing participation in
the SARA program, with eight properties consisting of 157 units enrolled in Fiscal Year 2024, and 17
properties with 403 units already confirmed for Fiscal Year 2025. We are optimistic that as this program
becomes more well-known, participation will continue to increase. However, permanent legislative
authority remains essential to ensure that preservation can occur consistently and nationwide. CARH
continues to support the passage of legislation that would allow for decoupling on a permanent basis. I
would like to thank Representative Cleaver for his support of the decoupling legislation in the previous
Congress. We're hopeful that similar legislation will be introduced in this Congress. The Low Income
Housing Tax Credit, also known as the housing credit program, is a vital source for addressing
affordable housing in rural communities. It helps bridge the gap between what the market provides and
what market demands. Approximately 43% of Section 515 properties are financed with housing credits.
Since its inception 36 years ago, approximately 3.7 million affordable rental homes or units have been

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produced. In multifamily rental housing, the one-year impact for building 100 apartment units is the
creation of 161 local jobs, with $11.7 million in local income and $2.2 million in local taxes and
government revenue. One challenge impacting the effectiveness of the housing credit program in rural
areas is the unresolved tax status of Fannie Mae and Freddie Mac. Uncertainty of these classifications
under the Internal Revenue Code is compromising their ability to participate in multi-investor housing
credit funds, which are essential to financing smaller rural deals. Allowing them to fully participate in
multi-investor funds would greatly expand capital available for underserved areas. CARH supports
legislation that would clarify the government-sponsored enterprises are not subject to restrictions for
purposes of housing credit investment. CARH applauds the administration and Congress for advancing
Opportunity Zone reforms that better target rural communities. The bill's requirement that 30% of new
zones be rural and that 50% of capital directly support housing, jobs, and infrastructure ensures that
rural communities...

00:38:04 - 00:38:06

Chairman Mike Flood (R-NE-01)

I'm sorry, Mr. Maute, your time has expired.

00:38:06 - 00:38:06

Mr. Ian Maute, Director of Development, Buckeye Community Hope Foundation, on behalf of the
Council for Affordable and Rural Housing (CARH)

Thank you.

00:38:07 - 00:38:11

Chairman Mike Flood (R-NE-01)

But we would encourage you to submit that for the record, which we will gladly accept. With this, Mr.
Lipsetz, you are now recognized for five minutes for your oral remarks. [Gavel]

00:38:11 - 00:38:11

Mr. Ian Maute, Director of Development, Buckeye Community Hope Foundation, on behalf of the
Council for Affordable and Rural Housing (CARH)

Sure thing.

00:38:16 - 00:43:35

Mr. David Lipsetz, President and Chief Executive Officer, Housing Assistance Council

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Chairman Flood, Ranking Member Cleaver, members of the subcommittee, this feels a whole lot more
like choir practice than it does a hearing. I think we're singing all the same tune so far, which feels great.
My name is David Lipsetz, President and CEO of the Housing Assistance Council, commonly referred to
as HAC. HAC is a national nonprofit and CDFI that helps local organizations in all 50 states construct
good quality homes in rural communities. We also pursue assiduously nonpartisan research that this
committee and other national policymakers have been relying on for over half a century. As we've all
discussed, 20% of Americans living in rural communities, we play an outsized role in the nation's
economy. We sustain and power the nation with food, fiber, and fuels. We've launched over half the
small businesses, and we maintain a trade surplus. The reality is that despite the vast wealth generated
by rural communities, many of the rural families are left facing deep economic challenges. Wages
remain stubbornly low. Median family incomes in rural communities, 25% below the rest of the nation.
Poverty remains stubbornly high, with over 80% of the persistent poverty counties in rural areas. This
reality is neither a recent nor, I would suggest to you, an accidental trend. It's not just free market forces
and individuals freely choosing where to live. Public policy has a very heavy hand in this reality. If you
hear nothing else from me today, please know that there are economic, tax, and housing policies
stripping many heartland rural communities of their economic engines, anchor institutions, and young
people. of their economic engines, anchor institutions, and young people. The good news here, though,
is that Congress can chart a new course, one in which rural communities are treated fairly by federal
policy and programs that are already in place and that nearly all of us in this room support. These are
things such as the mortgage interest deduction, Fannie and Freddie as GSEs, CRA, LIHTC, opportunity
zones. All these things play positive roles in our housing finance system, yet all have design elements
that steer investment to the most overpriced suburban and urban markets in the nation while leaving
most rural communities behind. These programs can be improved. They can make the cost of capital for
housing preservation and production affordable in each of the markets where it's working and provide
public and private sector capacity in the communities that need it most to prime the private market, put
public funds to their highest and best use. HAC encourages the subcommittee to address rural
America's housing needs with, one, a focus on that capital in small towns, and two, building up the
capacity of public, private, religious, nonprofit, and for-profit rural housing providers. Let me use the
remainder of this time to focus on two issues. First, affordability is the greatest challenge in rural
America. Wages have fallen far below the cost of housing. 5.6 million rural households can't afford the
home they live in. This includes millions of homeowners facing mortgages and utility bills that eat up
more than 30% of their income and 44% of rural renters that can't afford their own rent. And if you aren't
already aware, the affordability crisis has driven a 30% increase in rural homelessness over just the last
three years. That is an unconscionable statistic. Thankfully, many members of this committee and
across the House and Senate are supporting proposals that address the crisis, including many I see here
today that support the Affordable Housing Tax Credit Improvement Act and its basis boost for LIHTC
properties, the Neighborhood Homes Investment Act with a tax credit that drives private investment into
housing production. It also closes the cost the gap between the cost of construction and the lower
appraised values of many rural homes. Secondly, bipartisan momentum exists for modernizing housing
programs that are designed for rural America and USDA's Rural Housing Service. Housing champions in

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both chambers and on both sides of the aisle have assembled a package of common sense
improvements using public-private partnerships, expanding the roles of CDFIs and capacity building
investments in local housing organizations. You can find many of these in the discussion drafts in Mr.
Cleaver's bill. You will also note that they are supported by bipartisan legislation on the Senate side by
Senators Moran and Shaheen. And I really have to thank Mr. Cleaver and Mr. Nunn for continuing the
work in this chamber that has been launched by Ms. Smith and Mr. Rounds on the Senate side in the
Rural Housing Service Affordable Act. Central to these bills is the public investment we put into the
533,000 units of 515 housing, 350,000 remain. We have the power to save them. Let's decouple rental
assistance. Once again, HAC appreciates the subcommittee's time and your attention to this topic. I'm
looking forward to today's discussion.

00:43:35 - 00:45:16

Chairman Mike Flood (R-NE-01)

Thank you, sir. We'll now turn to member questions. [Gavel] I now recognize myself for five minutes for
questioning. Mr. Baier, in your written testimony, you shared some details about Nebraska's Rural
Workforce Housing Investment Fund. The state program provides matching grants to local nonprofit
developers and communities with populations of less than 100,000 people. These projects do not have
any income restrictions for inhabitants. Instead, the projects are limited by the cost of construction for
each home. New homes, single-family home construction is limited to $325,000 per unit, and multi-
family unit costs are capped at $250,000 per unit. Instead of having an ongoing requirement that any
tenant meet certain income targets, this program is focused solely on controlling building costs and
bringing more affordable housing supply online. This program has turned $59 million in state funds into
986 total completed owner-occupied and rental units, which comes out to a little less than $60,000 in
state investment per built unit. One of the reasons I wanted to raise this program as part of the
conversation today about federal programs is that this seems much more prudent and cost-effective for
building workforce housing supply compared with how our federal programs operate. And I think there's
a fundamental question, why? It's not trying to do too many things at once, in my opinion. Mr. Baier, if the
Rural Workforce Housing Investment Fund program required ongoing income verification requirements
for landlords and income requirements for any homebuyer purchasing a home, do you think those
requirements would add cost and bureaucracy to the program?

00:45:16 - 00:45:25

Mr. Richard Baier, President and Chief Executive Officer, Nebraska Bankers Association

Yes, Congressman, I do believe they would add significant cost to the way that we administer our
housing plan in Nebraska.

00:45:25 - 00:45:34

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Chairman Mike Flood (R-NE-01)

Mr. Baier, if the rural workforce housing investment program included a requirement that all building
materials and appliances used in a home be American made, would that add cost to the program?

00:45:34 - 00:45:38

Mr. Richard Baier, President and Chief Executive Officer, Nebraska Bankers Association

Yes, Congressman, I do believe that it would add cost significantly.

00:45:38 - 00:45:52

Chairman Mike Flood (R-NE-01)

What if the program included requirements that all contractors and subcontractors on the project track
and report the wages of every worker working on the project to comply with a sliding scale calculation of
prevailing wage based on subcategories by profession? Do you think reporting would increase costs?

00:45:52 - 00:46:04

Mr. Richard Baier, President and Chief Executive Officer, Nebraska Bankers Association

I do, Congressman. We struggle with many of our subcontractors and contractors who may have one or
two staff, so it would be a significant administrative burden.

00:46:04 - 00:46:36

Chairman Mike Flood (R-NE-01)

What if the program included a requirement that 25% of total labor hours on any project be done by low-
income workers and that 5% of labor hours must be done by a business that has one of the following
characteristics? Number one, is at least 51% owned by low-income people. Number two, had at least
75% of the company's labor hours performed by a low-income worker. Or number three, is at least 51%
owned by workers in Section 8 assisted housing. Do you think those requirements would increase the
program's costs?

00:46:36 - 00:46:40

Mr. Richard Baier, President and Chief Executive Officer, Nebraska Bankers Association

Yes, I do. I believe that'd increase costs significantly, Congressman.

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00:46:40 - 00:48:05

Chairman Mike Flood (R-NE-01)

Thank you. The requirements I just described are all requirements for the federal dollars in the HUD
programs, like the Home Investment Partnership Program, a program that, like Nebraska's Rural Housing
Investment Fund, is designed to build housing supply. I'm sure we all have members and witnesses in
this room that may agree with the intent of some of those specific requirements. Paying higher wages,
providing more opportunities for lower-income workers, and using American materials and buildings are
all goals that I could understand. But every one of those requirements carries a cost, and we need to be
smarter about weighing the trade-offs of those costs against their benefits. Congress has a tendency to
load up federal programs with ancillary priorities, which add cost and ultimately detract from the main
objective of the program in the first place. These programs die a death of a thousand cuts. Each new
regulatory requirement on labor, procurement, environmental reviews, and everything else slowly can
take a housing program and turn it into an expensive bureaucratic exercise. We need to stop diverting
resources from the framers, the plumbers, the electricians necessary to build a home to the bureaucrats
and outside consultants necessary to fill out the paperwork. With that, I yield back. The Chairman now
recognizes the ranking member of the subcommittee, Mr. Cleaver, for five minutes for questions.

00:48:05 - 00:49:18

Ranking Member Emanuel Cleaver (D-MO-05)

Thank you, Mr. Chairman. Mr. Lipsetz, one of the biggest barriers to using HUD programs in rural
communities is often the amount of red tape and regulatory burden that comes with funding. Small rural
communities are often not equipped administratively to navigate the regulatory complexities of these
programs. I've represented towns where the police chief was also the fire chief, and also the librarian.
So, um, when those programs are available and we don't get rural communities requesting, you know,
some help because we don't have the assistance to even provide help, they don't have in many places to
go. HUD programs were originally designed to serve cities and urban areas. Uh, what changes would you
suggest that Congress could make uh to broaden HUD programs to smaller and uh rural communities?

00:49:18 - 00:50:42

Mr. David Lipsetz, President and Chief Executive Officer, Housing Assistance Council

Mr. Cleaver, thanks for your question. Um, and it's very similar to Chairman Flood's, right? In that we're
talking about the intent of programs that we think, I think generally we all agree with, yet there are
challenges in their application to these programs, and they slow down and they create additional
expense. Part of the reason that that happens, that that dynamic exists, is because there's not enough
money in these programs. And when the pie gets small, people fight fiercely for their piece. And if we
had I think one of the things that best answers your question, um, uh, Ranking Member Cleaver, is that
we help those smaller communities build the capacity to apply for and and receive the funds we're
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talking about. And there are HUD programs to do it. Rural capacity building is a very specific one. I would
also suggest Rural Community, uh, RCDI at USDA. That investment right there from Congress will put
somebody on the ground in that hometown who has the ability to cut through some of what exists in
today's world, not some magic world in the future where we've finally gotten rid of a lot of these
regulations, but very much today's process.

00:50:42 - 00:51:02

Ranking Member Emanuel Cleaver (D-MO-05)

So, so HUD and USDA, uh, should, uh, work together in order to create whatever technical assistance
would be needed. Uh, and since these programs do, in in many cases, actually, um, overlap one another,
uh, is that a, an alliance that that you think would help solve the problem?

00:51:02 - 00:52:06

Mr. David Lipsetz, President and Chief Executive Officer, Housing Assistance Council

So, I think I'm one of the nation's very few people who've worked in both those buildings. And and I can
tell you they operate in fundamentally different ways. USDA is not HUD. Please do not entertain the idea
of taking the Rural Housing Service programs and plopping them down wholesale into a building that
has no capacity whatsoever to run them in a retail manner on the ground in the kind of community you
suggested. There may be a few ways to do that. But that doesn't preclude us from putting HUD and
USDA together to do alignment. There there is no reason that you could come up with that a property
being built needs more than one environmental review. I'm sorry. If you're layering it on at a state and
federal level, multiple different programs because of how hard it is to gather the funds, forget it. We need
one environmental review at most for a property built in in the small town that you grew up in, and I've
seen that picture of your house that you grew up in hanging in your office, and that's exactly what we
need to be able to do for those communities.

00:52:06 - 00:52:41

Ranking Member Emanuel Cleaver (D-MO-05)

Thank you. That, thank you very much. I'm gonna be quoting you about that, uh, about not trying to
implement programs by putting one of these agencies inside the other or, uh, or taking what they do and
and merging them. Uh, you know, what I think Mr. Garcia, uh, uh, do you think that the requirements such
as, uh, Davis-Bacon, uh, prevailing wages, uh, are making it difficult for rural communities to use, uh, HUD
programs?

00:52:43 - 00:52:43

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Mr. David Garcia, Policy Director, Up for Growth

Uh, yes.

00:52:44 - 00:52:45

Ranking Member Emanuel Cleaver (D-MO-05)

For housing? HUD programs?

00:52:46 - 00:53:08

Mr. David Garcia, Policy Director, Up for Growth

Of course. I, yes, I agree with that. I think there's, for two reasons for that. The first is, uh, that it kind of
shrinks the labor pool, particularly of contractors who are not set up to track those, uh, kinds of
requirements. Uh, and then, you know, as, as mentioned earlier, there are a lot of, uh, ancillary policy
goals that we oftentimes put into these programs that are, very well-meaning, but do add cost, and this
would be one of them.

00:53:09 - 00:53:10

Ranking Member Emanuel Cleaver (D-MO-05)

Thank you.

00:53:11 - 00:53:16

Chairman Mike Flood (R-NE-01)

Gentleman yields back. The Chairman of the full committee, Mr. Hill of Arkansas, is now recognized for
five minutes.

00:53:16 - 00:55:14

Chair J. French Hill (R-AR-02)

Well, thank you, Chairman Flood. Thanks to our panel for being here to help us think through the
particular issues that challenge housing and housing access and housing affordability in in rural areas,
and I thank the the chairman and the ranking member for collaborating on this hearing. It's pretty
challenging to do. I mean, I was a banker in, uh, rural Arkansas for many, many years, uh, in the
Mississippi Delta. Uh, Chicot County has a population of 7,500 people today. When I, when I opened the
bank there, it was probably 15,000, so it's shrunk in 15 years to that amount. And Ashley County has a
population of, of 18,000. And I wouldn't think any of those counties have stick-built, you know, home

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builders. They might have a custom builder of a certain amount. So, the things that I've noted are, you
don't have a regular construction infrastructure in in many rural counties. There are no comps if you
build a new house, so you can't get a secondary market financing on the loan. It's going to be a portfolio
loan for the most part. Uh, flood program, there are frequently, uh, homes built on bigger tracts of land
that part of the land is in the flood plain. The house isn't, the house is on a 40-foot hill, but you'd have to
deed it out in order to be covered under FEMA, so it's expensive to survey. But I have seen some
successes over those years. I mean, I've seen, uh, the grant program, some grant programs of the, by the
Federal Home Loan Bank, uh, be helpful to that marginal, particularly, I say, a marginal multi-family
developer in a rural area. I've seen that be a, a good gap filler for a, for a construction loan. gap filler or
for a construction loan. But I'm interested in Mr. Maute, what are some of the biggest challenges that
you've seen in your list of what barriers are in in a rural situation?

00:55:15 - 00:56:28

Mr. Ian Maute, Director of Development, Buckeye Community Hope Foundation, on behalf of the
Council for Affordable and Rural Housing (CARH)

Sure. Thank you for the question. Um, developing and and and building housing in rural areas, as you
mentioned, there are are several uh challenges. Uh, the majority of the work that we do is through the
housing credit program. Um, attracting investors uh that are purchasing credits at the same prices as in
urban areas, attracting construction debt, perm debt, um, for small communities, um, is is is also a
challenge. The projects that we build in rural areas just because of the size of the markets are, you know,
24 units, 30 units, maybe up to 50 or 60 units and just aren't as attractive to to the our financing partners
that we want to work with. So putting our capital stack together, uh, it can be difficult. Um, on the
construction side, finding high quality, capable subcontractors to to build the projects is an issue. Um,
we work with a handful of of general contractors and a lot of times they will have subs that are nowhere
near the geographic area that we are in that they will, that they will have work on jobs simply because
they can't find qualified contractors in those areas. So it it it runs the gamut of from financing to
construction to um filling the units with with qualified residents.

00:56:29 - 00:57:14

Chair J. French Hill (R-AR-02)

Would you find on the finance on the capital stack side, I mean, do you see, do you have any model of of
working in a state with a large rural population where the the public employees fund or something in a
state has, you know, I would I would assume if you could hit some volume is what causes capital not to
be attracted. Just like if I can't build 10 houses at once, I don't want to drive an hour and a half to this
place to start a construction job. Is there some way that we could mobilize, you know, retirement
financing or pension financing? Because are the yields, if you got it, you think the yields could be
competitive if they were available to a for to a long-term fixed income investor?

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00:57:15 - 00:57:23

Mr. Ian Maute, Director of Development, Buckeye Community Hope Foundation, on behalf of the
Council for Affordable and Rural Housing (CARH)

Yeah, that's that's not something that we've looked at personally as far as raising that that sort of
capital. So I I don't know if I could really speak to that.

00:57:24 - 00:57:29

Chair J. French Hill (R-AR-02)

How about you, Mr. Baier? Any comments that you'd be from a finance from a good banker point of
view?

00:57:30 - 00:58:03

Mr. Richard Baier, President and Chief Executive Officer, Nebraska Bankers Association

Mr. Hill, I think it's a great question. I think we need to find all sorts of pots of capital to be able to
address this issue. The challenge is, uh, unlike, uh, some of my fellow testifiers, we're not talking about
60 units in rural Nebraska. We're talking about one to five units. And trying to generate a private sector
type return on those investments is really difficult. And that's why in many cases our banks get involved
in CRA activities, CDFI activities, those kinds of activities really to to be involved in that process because
otherwise it doesn't make financial sense.

00:58:04 - 00:58:11

Chair J. French Hill (R-AR-02)

Is it also tough on the extension of water and sewer in these kind of towns too? Is that that or is that not
as big a barrier?

00:58:12 - 00:58:21

Mr. Richard Baier, President and Chief Executive Officer, Nebraska Bankers Association

It's a huge challenge trying to develop lots of buildable lots in most of our rural communities and I am a
big believer in in uh eliminating blight and substandard for that reason and knocking down older homes.

00:58:22 - 00:58:23

Chair J. French Hill (R-AR-02)

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Right. Thank you very much. Yield back.

00:58:24 - 00:58:29

Chairman Mike Flood (R-NE-01)

Gentleman yields back. The gentlewoman from Georgia, Ms. Williams, is now recognized for five
minutes. [Gavel]

00:58:29 - 01:01:29

Rep. Nikema Williams (D-GA-05)

Thank you, Chairman Flood and Ranking Member Cleaver for having this very important hearing today.
And thank you, Mr. Cleaver, the Ranking Member of this subcommittee for your work on the Strategy and
Investment in Rural Housing Preservation Act. Y'all, this would expand the USDA's Rural Housing Service
as well as create a new multifamily rental housing preservation and revitalization program that is very
much needed. So I might sound like a broken record because I said this the last time. Y'all, although I
represent the Fighting Fifth District of Georgia, rural housing is important to me personally. I grew up in
rural Alabama. I heard our Chairman and other members talk about these small towns. And Mr. Cleaver,
the fireman might have been the police chief, but in the big city of Smiths Station, Alabama, where I grew
up, we didn't even have a police chief or a fireman. We had that one traffic light that only flashed in front
of the high school. So I know a little bit about rural housing because that's my lived experience. That's
where I grew up. All of my family is still in the big city of Smiths Station, Alabama. But although I
represent a district that is centered in Metropolitan Atlanta, I get it. I get the need for rural housing. But
not only just that, I came to Congress because as a member of Congress, I understand that the policies
that I enact, they impact the entire nation. And so it is important to me to have policies that help
everyone so that future generations of families and children have better opportunities and more quality
housing than I did growing up. opportunities and more quality housing than I did growing up. Because
that home that I grew up in in rural Alabama, it was on our family land, and we probably didn't meet all of
the regulations and all of the codes that needed to happen because my grandpa built that home. But it
had no indoor plumbing and no running water, and there are still people in rural America that need us to
be fighting for them. So I wanna make sure that we're doing that part. That's why I'm thankful for
Congressman Cleaver and Ranking Member Waters' work here on these important pieces of legislation
because it's clear that while my colleagues and I in the Democratic caucus are doing everything to honor
home ownership month, some of my colleagues on the other side of the aisle are making it so much
harder for home ownership in rural America and underserved communities. Whether it's this bill that we
just voted on, the one big billionaire bailout or whatever you wanna call it, or this proposed budget for
next year, many Americans are about to see in black and white in this budget which side of the aisle
really cares about making housing affordable in this country. Mr. Lipsetz, research from the Consumer
Financial Protection Bureau found that people living in rural counties not only tend to earn lower

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incomes and experience higher rates of poverty, but are also more likely to use expensive forms of non-
bank credit. Mr. Lipsetz, how do you think these trends harm the ability of rural residents to save and
qualify for affordable housing opportunities?

01:01:30 - 01:02:04

Mr. David Lipsetz, President and Chief Executive Officer, Housing Assistance Council

Thank you, Congresswoman Williams, for your question. The ability for a rural household to save on
average is quite strong, and yet the financial services surrounding them does not do not support that.
My organization did an analysis some years ago of bank closures, and there's an astounding percentage
of, I'm trying to recall it, I was just asking staff, 60-something percent of the banks that have closed,
bank branches have closed in the last 30 years. You don't have financial services when you live in places
like Smiths Station. Right?

01:02:04 - 01:02:10

Rep. Nikema Williams (D-GA-05)

We had one bank, but, you know, still not quite enough to meet the needs of everybody who needed it.

01:02:10 - 01:02:59

Mr. David Lipsetz, President and Chief Executive Officer, Housing Assistance Council

But one other piece of the puzzle that I think you started to hint that in your opening remarks is heirs'
property. You come from a family property that is gonna be split unless there are significant legal
documents in place, wills, and other things. That property is gonna be split and is gonna be in danger of
loss to your family and the wealth you've built up in it. My organization with Fannie Mae has now done
analysis of what the extent of heirs' property is across the country. And I know this isn't your question,
but we are desperate to get Congress to take a look at the risks that, families half a million families in
the United States face because their, property is tied up in an heir situation, that they can't gain the full
wealth of it.

01:02:59 - 01:03:31

Rep. Nikema Williams (D-GA-05)

And Mr. Lipsetz, you're right. It was not part of my question, but it is very important to me. And I actually
have bipartisan legislation that I'm leading with Congressman Byron Donalds right here on this
committee to address heirs' properties. So I look forward to I'm running out of time here as I always do
because I have so many questions when it comes to making housing affordable for everyone across this

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country. But I look forward to working with my colleagues on this heirs' properties legislation that is
bipartisan, that can truly help us maintain and build generational wealth in this country.

01:03:32 - 01:03:37

Chairman Mike Flood (R-NE-01)

Gentlewoman yields back. The gentleman from Tennessee, Mr. Rose, is now recognized for five minutes.

01:03:37 - 01:04:26

Rep. John W. Rose (R-TN-06)

Thank you, Chairman Flood and Ranking Member Cleaver for holding this important hearing, and thank
you to our witnesses for your time and, being with us here today and sharing your expertise. Mr. Maute,
as you may be aware, there is a current statutory requirement that manufactured homes be built on a
permanent chassis, which can add, frankly, thousands of dollars to the cost of a manufactured home. It
is my strong belief that this is an outdated requirement that should be removed from statute, and I'm
working on introducing legislation again this Congress, which would do just that. Mr. Maute, in your in
your opinion, would eliminating statutory requirement for a chassis on every manufactured home
increase the affordability and availability of these homes for rural America?

01:04:28 - 01:04:37

Mr. Ian Maute, Director of Development, Buckeye Community Hope Foundation, on behalf of the
Council for Affordable and Rural Housing (CARH)

Yes. I I believe it would increase the the affordability and allow units to be created cheaper and in a more
efficient and quicker manner.

01:04:37 - 01:04:55

Rep. John W. Rose (R-TN-06)

I agree, and I also would say I believe it will open up possibilities for innovations in the manufactured
housing space that will help us finally realize the true potential for manufactured housing to increase the
stock of homes all across the country. I I assume you'd agree with that as well.

01:04:55 - 01:05:17

Mr. Ian Maute, Director of Development, Buckeye Community Hope Foundation, on behalf of the
Council for Affordable and Rural Housing (CARH)

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Yes. Yes. We've we've dipped our toe personally at at at my employer on on looking at manufactured
housing, and some of the the technology and innovations are are amazing. employer. Um, on looking at,
I'm looking at manufactured housing and some of the the technology and innovations that are are are
amazing. And and what would it allow to do to just sort of smooth out the construction process and
make it predictable and not at the whims of of of weather would would be great and would help things a
lot.

01:05:18 - 01:05:24

Rep. John W. Rose (R-TN-06)

And and I would say remove the stigma maybe that's attached to the manufactured housing space. Do
you think that's achievable as well?

01:05:25 - 01:05:25

Mr. Ian Maute, Director of Development, Buckeye Community Hope Foundation, on behalf of the
Council for Affordable and Rural Housing (CARH)

I do.

01:05:26 - 01:06:03

Rep. John W. Rose (R-TN-06)

Well, very good. Mr. Baier, in your testimony, you highlight that Nebraska, like other rural areas of our
great country, lacks an adequate supply of material vendors, contractors, and subcontractors to
successfully build new housing units. And certainly I hear this all across Tennessee. As you noted, this is
a serious problem all across rural America. What steps can we take to increase the supply of these
critically important skilled workers? And frankly, if you will, speak to why is, normally, I believe markets
work. Why are markets not signaling adequately to cause those resources to come to bear?

01:06:04 - 01:06:38

Mr. Richard Baier, President and Chief Executive Officer, Nebraska Bankers Association

Mr. Rose, thank you for the question. Um, I would tell you, for me, it's a multi-pronged approach. We have
to, as a country, begin to embrace trade and vocational education as a first and foremost. We also have
to educate parents that a trade occupation is a wonderful opportunity and a wonderful career that
doesn't require a four-year college education that comes potentially with hundreds of thousands of
dollars in debt. And so as we make investments, we need to really focus our technical training onto
helping young people understand and embrace those opportunities in those trades.

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01:06:39 - 01:07:27

Rep. John W. Rose (R-TN-06)

Well, I couldn't agree more, and our our governor in Tennessee, Bill Lee, has done, I I think, an exceptional
job of focusing attention on career and technical education, what I call vocational education. Having
been a product of that through agricultural education years ago, I can personally attest to the process of
discovery that happens in our Ag classrooms in helping expose young people to the many trades and
maybe help them explore what careers might be of interest to them. For me, it ultimately led to a college
degree and college education, but I still value very much the exposure I had to the trades as a vocational
student back in the 1970s and 1980s, so I agree with you on that. Are there other things we could do
that would cause the market to work in terms of attracting talented workers, skilled workers into these
trades?

01:07:28 - 01:08:03

Mr. Richard Baier, President and Chief Executive Officer, Nebraska Bankers Association

Well, I think part of that may be scholarship programs. It may be efforts to allow home programs to let
community colleges or vocational schools actually build modulars on-site. We have a number of our
community colleges that build one to three to five units every year and then auction them off, and
typically, they bring more at or more than what the market value is of those of those units. So I think as
we think about it, we just have to get much more creative and invest in those opportunities, and a lot of
my banks then partner with those community colleges to offer sort of a first-time in-house mortgage to
go with that modular home that's built at the community college.

01:08:04 - 01:08:42

Rep. John W. Rose (R-TN-06)

Thank you. I agree with everything you're saying, and I want to just leave the panel with this thought. I I'm
a farmer in a rural area, and my quest in life has been to reassemble the the original land grant that John
and Ann Lancaster acquired from the from the Revolutionary War, and I've I've succeeded to some
degree in that. But as as I've done so, I've acquired a number of farmsteads. So I, like many other larger
farmers in my community, own a large number of empty houses, and we ought to figure out how we
encourage and incentivize the owners of those abandoned rural houses, how to put them back into the
housing stock. Thank you, Mr. Chairman. I yield back.

01:08:43 - 01:08:48

Chairman Mike Flood (R-NE-01)

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Gentleman yields back. The gentlewoman from Michigan, Ms. Tlaib, is now recognized for five minutes.

01:08:48 - 01:10:45

Rep. Rashida Tlaib (D-MI-12)

Thank you so much, Chairman. Thank you all so much for being here. While my district isn't rural, I love
my beautiful city of Detroit. Um, it does still face many of the same challenges plaguing rural
communities, as you know. No matter where you live, for example, we all have seen the vulnerability of
our communities, um, because of climate disasters from flooding to fires to heat waves. We know the
climate crisis is here. In my district, flooding has been chronic. Um, and many of the homes, uh, are to
many of my seasoned residents who don't have, you know, they're fixed income, they don't have the
capability of getting the basement cleaned up, um, addressing even the increase, like we're hearing now
more than ever, mold, uh, growing in people's homes. In Wayne County, which is the largest county in my
district, um, states, uh, states of emergency have been declared, and I've been here since 2019, 2021,
2023, disaster, uh, state emergencies declared for severe storms and flooding. According to FEMA's, uh,
National Risk Index, Wayne County and Oakland County, I have five communities in Oakland County, face
risks from natural hazards greater than 96% of US Census tracts. face risks from natural hazards greater
than 96% of the U.S. census tracts. While climate crisis can, you know, climate disasters can strike
anywhere, research has directly tied though, this is interesting, and I know my Ranking Member would
find it interesting, tied the present day climate risks to historic redlining practices. Redlined communities
have suffered from reduced public and private investment, which, you know, you know that impacts,
again, their ability to to, um, not have, like, irreparable harm, making them, again, very much exposed to
heat waves and flooding. Similarly, many rural communities have suffered from the same disinvestment,
as you know, and the lack of resources and and adaptive, uh, capacity. So, Mr. Lipsetz, you know, can you
explain why historically disinvestment, uh, disinvesting in communities, rural communities, communities
like mine, um, um, you know, how how it's made them even more vulnerable with the climate crisis?

01:11:01 - 01:11:30

Mr. David Lipsetz, President and Chief Executive Officer, Housing Assistance Council

Congresswoman Tlaib, thank you for your question. Um, and I would suggest that urban and rural
markets have to be intertwined if this nation's going to work well. It undermines our long-term political
and economic viability if we don't see the interests that we have that's shared across that geography.
More specific to your question, um, places like, uh, Dearborn, Michigan and others that are threatened by
storms. I used to work for Congressman John Dingell, so I know a touch about Dearborn.

01:11:34 - 01:11:34

Rep. Rashida Tlaib (D-MI-12)

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So you know about Aviation Sub, which is that is that

01:11:36 - 01:11:36

Mr. David Lipsetz, President and Chief Executive Officer, Housing Assistance Council

I sure do.

01:11:37 - 01:11:40

Rep. Rashida Tlaib (D-MI-12)

uh, beautiful Detroit neighborhood right up against Dearborn. So both of them, it was the first time I've
seen both of the communities coming in together and saying we got to do something about flooding.

01:11:46 - 01:12:24

Mr. David Lipsetz, President and Chief Executive Officer, Housing Assistance Council

It it's specifically what I'm thinking about. For rural communities, when disaster strikes like something
like there, the unfortunate reality is FEMA is not structured to deploy to rural places. And so if you take
the disaster in North Carolina where a hurricane, thousands of miles away, uh, wiped out small towns
and communities across the hills of North Carolina, FEMA's ability to deploy to those areas is shockingly
poor compared to its disaster responses for large places. That's what we do as federal government,
right? We're big, we come in, we plop down our thing, and it's one size fits all. And the ability for a federal
agency, if they are going to accept the responsibilities for disaster recovery, to be able to deploy both its
community assistance and its individual assistance to these small towns needs a very firm look.
Otherwise, we're going to leave places outside of major metro areas at tremendous risk for long term.

01:12:46 - 01:13:45

Rep. Rashida Tlaib (D-MI-12)

Yeah. You know, Detroit got some of the BRIC funding, you know, the uh Building Resilient Infrastructure
Communities program. It was really incredibly hard. I mean, it wasn't a ton. I mean, people don't realize
that $1 million, I mean, it's not even a dent into what is needed. And my district needs and relies, of
course, on that federal partnership. Uh, earlier this year when we did get the million dollars, there was a
sense of hope among residents that we were actually going to try to address it. Can you speak about
how shuttering the FEMA and programs like BRIC, um, will impact ability for some of our communities? I
mentioned earlier, um, redlining earlier, and now I feel like we're experiencing blue lining. I know my
colleagues don't want to hear it, but that's what I'm experiencing. I feel like even with our community
project funding, you know, ours got cut 70%, but when we were in the majority, we never cut their funding
because Americans are Americans no matter where they live, and the need is the need no matter, again,
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their political affiliation. Um, so if you can talk a little bit about, again, the BRIC program and why that's
important.

01:13:51 - 01:13:55

Mr. David Lipsetz, President and Chief Executive Officer, Housing Assistance Council

Um, so Congresswoman, that's not a program I'm familiar enough to speak with any resonance.

01:13:55 - 01:13:56

Rep. Rashida Tlaib (D-MI-12)

That's okay. But I do want to emphasize to my colleagues, we should stop blue lining. I I really, many of
Americans have so many ties to each other. I just don't think one community should be hurt because of
who they voted for. Thank you. I yield.

01:14:08 - 01:14:10

Chairman Mike Flood (R-NE-01)

Gentlewoman yields back. The gentleman from South Carolina, Mr. Timmons, is now recognized for five
minutes.

01:14:14 - 01:14:49

Rep. William R. Timmons IV (R-SC-04)

Thank you, Mr. Chairman, and thank you to the witnesses for being here after a crazy week in the
Financial Services Committee. Rural America is facing a growing housing crisis, but it is one we have the
tools to fix. One of the clearest barriers to new development is the permitting process. Home builders
back in South Carolina tell me that permitting delays alone can add up to $60,000 to the cost of building
a single home. In rural areas, that's often enough to derail a project before it even begins. If we are
serious about addressing the rural housing crisis, streamlining permitting must be a part of the solution.
Uh, Mr. Garcia, what specific best practices should Congress consider promoting to reduce permitting
related costs and encourage more private development in rural communities?

01:15:01 - 01:15:46

Mr. David Garcia, Policy Director, Up for Growth

Thank you, Congressman. I think, there there are two specific, things that come to mind. The first is
streamlining the requirements for specific federal programs that provide critical funding for affordable
housing. I think as we've heard earlier, many of the requirements, while well intended, can add

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significant, cost through an extended project timeline. So that is a critical piece too. I think also,
providing resources for localities to permit or to streamline their own permitting process is really critical.
We have a lot of, municipalities that would really like to undertake the work of reforming, the way that
they plan and improve for housing, but they don't have the resources to do that. And I think that's
particularly true in rural communities where, the planning capacity is, is not like in larger cities.

01:15:46 - 01:16:26

Rep. William R. Timmons IV (R-SC-04)

So a lot of municipalities are trying to encourage affordable housing, but they are kind of doing it
through a patchwork framework that creates uncertainty. And when you don't know what the rules are
and you start a project and they keep moving the goalposts, it's problematic. So I guess my question is,
you know, we have the National Flood Insurance Plan which creates a framework through which people
can create some sort of expectations. Do you think it would be helpful to have something similar, a
menu of options that municipalities and local governments could use to try to create that best practice
and create more certainty for potential developers?

01:16:26 - 01:16:41

Mr. David Garcia, Policy Director, Up for Growth

Yes. I think that would be extremely helpful. Uncertainty is a huge barrier to development in any
community, and to the extent the community can make the rules clear and precise upfront, that will be a
big help for getting more housing built.

01:16:41 - 01:16:41

Rep. William R. Timmons IV (R-SC-04)

And to you, Mr. Maute, in your experience working with rural communities, how do you how do
permitting delays or regulatory complexity affect your ability to get new housing projects off the ground?
Thank you for that.

01:16:53 - 01:17:33

Mr. Ian Maute, Director of Development, Buckeye Community Hope Foundation, on behalf of the
Council for Affordable and Rural Housing (CARH)

Thank you for the question. Yes. Permitting delays, local approvals, whether it's water, sewer, tap fees,
add a lot of uncertainty. Sometimes the goalpost is moved where we're anticipating one set of fees, one
set of review process, and we we go to submit our our plans, our specs, and move through it, and and it
changes. So it it it does create a lot of delays, a lot of problems, and it's it's mostly all tied to uncertainty

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as as Mr. Garcia stated. Knowing, you know, knowing what something is gonna be when we go in is is
paramount to to our success. And and working with municipalities that that understand that, it would
also be extremely helpful.

01:17:33 - 01:18:18

Rep. William R. Timmons IV (R-SC-04)

You know, our country's seen an an incredible opportunity using telehealth to reach rural communities
that don't have access to good doctors. Is there a world in which we could use, I mean, tele inspections
to streamline the permitting process, to streamline the inspection process? I mean, I'm not saying it
would work in every circumstance, but after maybe a year of in person inspections where the contractor
and the subcontractor was able to show that they were competent, is there a world in which we could
transition to predominantly using videos and submitting them to reduce travel time of inspectors and
just streamline these processes, Mr. Maute? Is that something that you think would work?

01:18:18 - 01:18:45

Mr. Ian Maute, Director of Development, Buckeye Community Hope Foundation, on behalf of the
Council for Affordable and Rural Housing (CARH)

Yes. I I do think that would work, and and we're we're seeing it work. You know, following the pandemic,
a lot of inspections went from being in person to being virtual, whether it was submitting videos to as
simple as someone carrying their phone and FaceTiming or Skyping with folks to show them the work
that had been done, and and those those inspection, those review processes were were just as efficient,
if not more, than the in person inspections. I don't think anything was lost when we when we did that and
continue to do that.

01:18:45 - 01:19:14

Rep. William R. Timmons IV (R-SC-04)

I mean, if somebody was incentivized to create a really good video that would cut down on travel time
and allow someone to basically spend fifteen, twenty minutes, whereas a personal inspection would
take hours, I just feel like that's a really easy streamlined cost-saving mechanism. And, I mean, delays,
time is money. And if we could streamline that portion, I think it would be a step in the right direction. I'm
out of time. I thank the witnesses for being here today. And with that, Mr. Chairman, I yield back.

01:19:16 - 01:19:21

Chairman Mike Flood (R-NE-01)

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Gentleman yields back. The gentleman from Wisconsin, Mr. Fitzgerald, is now recognized for five
minutes.

01:19:21 - 01:21:35

Rep. Scott Fitzgerald (R-WI-05)

Thank you, Chairman. Well, obviously, you're well aware we have a situation where there's just many
young adults who can't afford a down payment on a home, and, builders are not necessarily incentivized
to create enough starter homes or entry level homes for younger generations to begin to build wealth.
So, instead of the federal government being the answer to everything, I know there's some attempts at
the local level, and I'd love to hear, if you're aware of some of those. The example I continue to cite is a
next generation housing initiative. It's in Washington County, which is in my district in Wisconsin. It is a
locally driven effort to expand affordable homeownership for middle income families by developing
about a thousand units, of new owner occupied homes by 2032. is uh it's a locally it's a locally driven
effort to expand affordable home ownership for middle income families by developing about a thousand
units uh of of new owner occupied homes by by 2032. So this is real. This is really happening right now.
It was backed by $10 million, which was a county investment. The program provided infrastructure
subsidies to developers and down payment assistance to buyers, up to $20,000 per home. And what it
does is it sets kind of a clear affordability target. It requires that 40% of the homes be sold under
$340,000, and all of them have to be under $420,000. Alright? So, I I think there's some things we could
do at the federal level to assist some of these types of programs, to reduce development costs and
expand housing options. The initiative, it also promotes zoning reforms, which talk to any Wisconsin
homebuilder right now. It's a big part. We talked a little bit about the underground and everything, all the
prep that needs to be done before a lot is ready to go. And then a public private advisory group that
oversees the effort. And there are some other options too. There's some volunteerism that young
couples can get engaged in if they want to, if they wanna earn some, earn some of those credits. So, um,
I think, uh, Mr. Maute, maybe have you heard of any of these types of programs, or are you aware of
anything that's being done at the local level that that is similar to this?

01:21:36 - 01:21:53

Mr. Ian Maute, Director of Development, Buckeye Community Hope Foundation, on behalf of the
Council for Affordable and Rural Housing (CARH)

Um, where I work, we we've focused solely on multi-family. So, so I'm not as familiar with some of the
the the single family programs. There are some states we operate in that would have will have a single
family state housing credit that that folks can use, but as far as on my my day-to-day in utilizing those
programs, I I have not.

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01:21:54 - 01:22:07

Rep. Scott Fitzgerald (R-WI-05)

Yeah. Mr. Garcia, are you aware of anything that I I know there was some stuff the last time we had a
hearing, I think it was in mid-May, there was some discussion about a program in Colorado that is very
similar in some smaller mountainous towns, I know.

01:22:08 - 01:23:07

Mr. David Garcia, Policy Director, Up for Growth

I think there are um a couple examples both at the state level and the local level where you have uh
assistance for first-time homebuyers or just homebuyers in general. Um California has a statewide
program called Dream for All. I think it's wildly oversubscribed, which tells you the need for something
like down payment assistance and I think there's there's something to that. I think the challenge is
without a commensurate increase in housing supply, um you are not necessarily going to drive the cost
of the housing down. So the down payment assistance is useful, but we also need to think about, okay,
we need to increase housing supply overall. And so to your point about about, you know, no incentive to
build, say, starter homes, this is where a lot of the zoning reform, land use regulation changes come into
play, where you uh zone and plan for smaller, smaller starter homes that we used to build pretty
routinely. Uh those are the kinds of things that that uh if we can get the market working right to provide
those, those are going to be naturally more attainable than the the kind of larger homes that we see
going for uh kind of exorbitant prices today.

01:23:07 - 01:23:29

Rep. Scott Fitzgerald (R-WI-05)

Right. Density should be our friend in many of these projects, right? Not everybody can have a three
bedroom, two bathroom home. A lot of a lot of what is needed are these starter types homes. I was just
going to ask, um Mr. Baier, do you see a role for and have you experienced as uh in the banking industry,
um a role for for financial institutions on this front?

01:23:30 - 01:24:25

Mr. Richard Baier, President and Chief Executive Officer, Nebraska Bankers Association

Well, I appreciate the question. As I begin to think about my state, we are seeing partnerships. To your
point, volume is really where we're at in terms of keeping costs down and providing the supply of homes.
Uh we currently under our rural workforce housing program have uh four different towns that have
literally contracted with one townhouse developer because there was not enough demand in one
community, but what they're then literally pooling their resources and saying, my community will

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guarantee 12, my community will guarantee 20, and then this developer now is ready to embrace 40 to
60 town homes in a very rural area. And so we think that that volume is important. Uh our banks are
coupling that with again, low interest loans or first-time home buyer loans as part of that process. Uh,
you know, I applaud the work that you've done with the ACRE Act, which would again provide another
tool to help lower cost mortgages. I think there's a lot of opportunities out there to build volume and
keep costs down.

01:24:25 - 01:24:27

Rep. Scott Fitzgerald (R-WI-05)

Thank you for being here. I yield back.

01:24:28 - 01:24:32

Chairman Mike Flood (R-NE-01)

Gentleman yields back. The gentlewoman from Massachusetts, Ms. Pressley, is now recognized for five
minutes.

01:24:32 - 01:27:23

Rep. Ayanna Pressley (D-MA-07)

Thank you, Chairman Flood and Ranking Member Cleaver for this uh truly critical hearing. As I've said
many times before, housing is the number one issue I hear about from my constituents in the
Massachusetts Seventh, and I'm sure it's the same for all of my colleagues representing rural districts.
Urban and rural housing issues, urban and rural housing issues are not opposites and not mutually
exclusive. And when we talk about rural housing, we cannot ignore the ripple effects of public health
crises such as the opioid epidemic and how they intersect with housing insecurity and incarceration. To
illustrate this point, let me tell you two stories that on the surface may look different, but at their core are
remarkably similar. A story not uncommon in major cities is that of Emiliano who lived in public housing
his entire life. But after he served time for a nonviolent drug offense, he was barred from returning
home. Unable to find employment due to his record, he started his own business and began the difficult
journey of rebuilding his life. But every time he applied for housing, his record shut the door in his face
despite doing everything right. He lacks stable housing and has to stay with different relatives, couch
surfing. He served his punishment, but he was still being penalized for no legitimate reason. And in rural
districts, there are stories like Maria, a mother of two who became addicted to opioids after a workplace
injury. She was convicted for a possession charge and never served time. But in her small town, there
are only a few landlords, and they use third-party screening services that automatically flag anyone with
a record. Like Emiliano, she was shut out before she even got a fair chance. With no place to go, her kids
were placed into foster care, and she had to live in her car trying to fight addiction while rebuilding from

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nothing. These stories, one urban, one rural, are playing out all over the country. The opioid crisis, mass
incarceration crisis, and the housing crisis are not separate issues. They are deeply connected. This is
why I introduced the Housing First Act to ensure old or irrelevant criminal records do not deny people
who are trying to reenter society and rebuild their lives to provide them with ability to access housing.
Mr. Lipsetz, in your view, would improving access to housing for people with criminal records, including
those recovering from opioid addiction, reduce recidivism, and improve community stability?

01:27:24 - 01:28:30

Mr. David Lipsetz, President and Chief Executive Officer, Housing Assistance Council

Thank you for your question, Congresswoman. If, uh, at the beginning of this hearing, Chairman Flood
gave a perfect description of how housers like us sitting here don't need to be in the business of who's
moving into the unit. We need to provide excellent units, high quality, and if they're coming in with a
record of having served time or other issues, that's not our business. That's overregulation and
overreach by the federal government. We need to be able to equally house folks who are coming in to
our front doors without asking us as as the owners or financiers of these properties, anything about that
personal record. I would gladly house the families that you're talking about in the units we work, and we
are we're able to as a CDFI, unless there are other public monies in the program or in the property. That's
not my business. I'm a Houser, and every single American who knocks on the front door, who needs a
place to live, that's my job.

01:28:31 - 01:28:42

Rep. Ayanna Pressley (D-MA-07)

Thank you. Mr. Lipsetz, have you seen models of public housing agencies or nonprofits partnering with
treatment or reentry programs to implement this kind of supportive housing approach?

01:28:42 - 01:29:14

Mr. David Lipsetz, President and Chief Executive Officer, Housing Assistance Council

Yeah, not from my current work, but uh previous employer. I did see, uh, Oakland Housing Authority, uh,
partnering with its county, uh, to do reentry programs, being able to set aside some of its, uh, section
nine public housing units for that use specifically. It was an extraordinarily well received program in the
city of Oakland and functional for the families that had someone coming back ahead of household who
had been incarcerated to reunite with children. Um, but it's not a rural story I'm telling you.

01:29:14 - 01:29:41

Rep. Ayanna Pressley (D-MA-07)

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Thank you. Thank you very much. Um, so the point is, if we don't make safe and affordable housing
accessible to people who are trying to get back on their feet, overcome their drug addiction, and just
provide for their families, we're just reinforcing the cycle of homelessness and incarceration. Sam
agrees. My Housing First Act offers a pathway to treat people with dignity and to break this vicious cycle
in urban, suburban, and rural communities. Thank you, and I yield back.

01:29:41 - 01:31:09

Vice Chairwoman Monica De La Cruz (R-TX-15)

Thank you. Hello. Good afternoon. I would like to recognize myself, Congresswoman Monica De La Cruz.
I am I have the honor of representing a rural district in Deep South Texas on the border, McAllen, and
housing is something of great importance not only because it is a rural community but also because of
the economic challenges that we have down there. McAllen. And housing is something of great
importance, not only because it is a rural community, but also because of the economic challenges that
we have down there. I am committed to finding affordable housing solutions for the people in my district
and really for across the country. South Texas is seeing innovative building solutions. As you know, the
population of Texas is increasing by leaps and bounds and so we're looking for low cost solutions. There
is a Starbucks locally that's opened a 3D printed building, a 3D printed Starbucks. Low-cost modular
homes are being constructed in rural areas by nonprofits, Come Dream, Come Build, in partnership with
multiple US banks. And there is the largest 3D neighborhood nearing completion in the state of Texas.
These are innovative solutions to our building and housing challenges. My question is for Mr. Garcia.
What do you see as the largest obstacle private companies face when seeking to deliver low cost
innovative housing solutions like modular or 3D printed homes to our rural communities?

01:31:25 - 01:31:34

Mr. David Garcia, Policy Director, Up for Growth

Thank you for the question, Congresswoman. I think there's a few challenges that off-site or
industrialized construction builders face. The first is many times local rules regulations do not allow for
that kind of housing to be sited in specific neighborhoods. And so you may have a zoning regulation that
forbids any type of manufactured housing that may be rooted in kind of a kind of outdated view of what
manufactured housing really is or looks like.

01:31:52 - 01:31:52

Vice Chairwoman Monica De La Cruz (R-TX-15)

And those would be local policies. Correct?

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01:31:54 - 01:32:05

Mr. David Garcia, Policy Director, Up for Growth

Those are local. Yes. I would say we mentioned this earlier, but there are some outdated rules at HUD
that we should be examining and revising as well. There's mention of the permanent steel chassis rule.
Well, that if we were to remove that, would reduce cost and time to build manufactured housing pretty
significantly. And particularly in places where you have a high cost of housing, those kinds of changes
can be really impactful to bring more affordable housing.

01:32:21 - 01:32:21

Vice Chairwoman Monica De La Cruz (R-TX-15)

And for the American public that's listening right now, what is the chassis rule?

01:32:25 - 01:32:44

Mr. David Garcia, Policy Director, Up for Growth

So the chassis rule is essentially a rule by HUD that says that any home that's built, that's manufactured
needs to have a steel chassis or if it's not going to be permanently affixed so that it can be moved even
though the vast majority of manufactured homes, they they never move once they're sited. And so we
have an unnecessary amount of extra materials that go into manufactured home that really don't need to
be there.

01:32:54 - 01:32:54

Vice Chairwoman Monica De La Cruz (R-TX-15)

What is the percentage of manufactured homes that actually move?

01:32:59 - 01:32:59

Mr. David Garcia, Policy Director, Up for Growth

Uh, I think it's pretty low. I don't have a statistic off top of my head, but, it is it is shockingly low.

01:33:04 - 01:33:46

Vice Chairwoman Monica De La Cruz (R-TX-15)

Thank you. We need to continue to innovate and find solutions to the challenges that our rural housing
communities are facing. Data from the National Association of Realtors shows we're only building one
new home for every two new jobs created nationally, and this ratio is often worse in rural communities.
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Meanwhile, rural housing development faces unique infrastructure challenges including inadequate
roads, utilities, and broadband access plus higher per unit construction costs due to smaller project
scales. Mister Garcia again, what specific federal programs or policy changes would you recommend to
make rural housing construction economically viable for developers?

01:34:01 - 01:34:09

Mr. David Garcia, Policy Director, Up for Growth

Thank you for the question. I think to make more projects economically viable, we really just need to
look at the cost of construction. As we noted earlier, you know, costs of construction are high across the
country, but are are particularly, I would say, harmful in rural communities where it costs more to bring
materials to the sites. It costs more to source labor and contractors. And so anything we can do to bring
down materials and labor costs is gonna be really important to making those projects work better.

01:34:32 - 01:34:32

Vice Chairwoman Monica De La Cruz (R-TX-15)

Thank you. I yield back, and I now recognize the gentleman from Montana. Mister Downing is now
recognized for five minutes.

01:34:42 - 01:36:18

Rep. Troy Downing (R-MT-02)

Thank you, Madam Chair, and I thank the chairman for putting this together. I really appreciate the
constructive dialogue today on barriers to rural housing development. Just a couple of stats, you know,
Montana, Montana's Second Congressional District that I represent is the largest by landmass after
Alaska. that is the largest by landmass after Alaska. So we we we've got a lot of dirt and a lot of long
roads. And a couple of things, I've I've talked about it in this committee, you know, in the past, but I really
think about the path to ownership being that, you know, fundamental part of the American dream. And I
think of the limiting factors there. And I talk to folks about the small amount of increase in building a
home and how many potential buyers that even a small modest increase prices out of the market and
how important that is. And something that really, you know, sticks in my mind is the, the, you know, the
24% of the current average single family home sale prices from regulations, you know, across all levels
of government. So, things things that I think about. But I'm going to shift gears here for a second
because I'd like to focus my initial questions on communities that are frequently left out of these
discussions. And those are tribal communities. You know, Montana is home to seven federally
recognized Indian reservations. And each one plays a critical role to the local community and culture.
And Native American residents of Montana, especially those living on reservations, experience
significantly lower home ownerships, up to 12% lower than Montana's overall population. So I'm going to

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start with Mr. Garcia. Can you describe the unique challenges that Native Americans face when it comes
to home ownership?

01:36:24 - 01:36:48

Mr. David Garcia, Policy Director, Up for Growth

Thank you for the question, Congressman. Some of the unique challenges include pretty significant
rates of poverty. And so when you have that kind of impoverishment in any community, it's going to be
difficult for them to not just pay the rent, but save any sort of money to make a down payment and build
wealth. Um, I think the other challenge that they, they, um, can face is just access to, to credit and, and
financing sources that's just not available to the communities, uh, in, in, uh, tribal communities like they
are to the broader public.

01:36:54 - 01:36:55

Rep. Troy Downing (R-MT-02)

Thank you. Mr. Lipsetz, do you have anything to add to that?

01:36:59 - 01:37:40

Mr. David Lipsetz, President and Chief Executive Officer, Housing Assistance Council

Uh, thank you, Congressman. Yeah, we've we've actually worked with the Northern Cheyenne tribe in your
district quite a bit, and it is access to credit. It's not just the the regulatory costs that you were
mentioning, 24%, which I think everybody here finds a challenge with that. But the cost of capital
delivered to the reservation without a well-structured banking environment or a lot of financial services
is going to cost the individual family more. One of the few ways that I've seen that addressed well is
there's a very strong network of Native CDFIs that can de-risk that lending for private organizations.
They're not trying to grab market share. They're bringing in a portion of the cost of the house to bring
that down for the private lender, and being able to fund those Native CDFIs is a not small piece of the
puzzle.

01:37:51 - 01:37:55

Rep. Troy Downing (R-MT-02)

Thank you. Uh, back to Mr. Garcia. What combination of federal housing assistance and technical
support can help rural Native communities leverage private sector investments?

01:38:05 - 01:38:08

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Mr. David Garcia, Policy Director, Up for Growth

I don't know that I have a good answer to that question. Um, I would, I would defer back to some of my
colleagues on that.

01:38:10 - 01:38:10

Rep. Troy Downing (R-MT-02)

Mr. Lipsetz?

01:38:12 - 01:38:13

Mr. David Lipsetz, President and Chief Executive Officer, Housing Assistance Council

I'm sorry, sir. Could you repeat the question?

01:38:14 - 01:38:14

Rep. Troy Downing (R-MT-02)

What combination of federal housing assistance and technical support can help rural Native
communities leverage private sector investments?

01:38:22 - 01:39:03

Mr. David Lipsetz, President and Chief Executive Officer, Housing Assistance Council

Um, well, as housers, it is the hardest, um, uh, part of the portfolio to support. Native housing on
reservation is extraordinarily expensive and challenging. There is a piece in the Rural Housing Service
Reform Act, um, sponsored by Senator Rounds and Senator Smith, a bipartisan piece of legislation that
would take USDA's 502 Direct program, take a portion of the funding for that, and lend it to the tribe. The
tribe itself then can make the loan to the individual, uh, or, uh, individual household on the ground, and
they have done this successfully in a demonstration program. If RHS Reform Act moves, I strongly
recommend that being one of the principles in there because folks like Northern Cheyenne and others
can actually then access a loan from a trusted lender on reservation.

01:39:16 - 01:39:23

Rep. Troy Downing (R-MT-02)

Thank you. Uh, in my last seconds here, I'm going to switch gears, uh, to housing more generally. I'm
going to go to Mr. Baier. What role can public-private partnerships play in addressing rural housing

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shortages? And what are some effective models you've seen that align private capital with local or
regional development goals?

01:39:35 - 01:39:37

Mr. Richard Baier, President and Chief Executive Officer, Nebraska Bankers Association

Great. Thank you for the question. I think a lot of it, first and foremost, is on lot development, making
sure we have a place to place homes in terms of public-private partnerships. And then also developing
those partnerships between local developers and, uh, the various tools we've talked about at the state
level and eliminating friction that exists because right now it's almost impossible because of the friction
to make them doable.

01:39:58 - 01:40:00

Rep. Troy Downing (R-MT-02)

Right. Thank you. Unfortunately, I've run out of time. So, Mr. Chairman, I yield. Madam Chair, I yield.

01:40:01 - 01:40:03

Vice Chairwoman Monica De La Cruz (R-TX-15)

Thank you. The gentlewoman from Colorado, Ms. Pettersen, is now recognized for five minutes.

01:40:09 - 01:42:25

Rep. Brittany Pettersen (D-CO-07)

Thank you, Madam Chairwoman, and thank you to everybody for being here today. My name is Brittany
Pettersen. I represent Colorado's Seventh Congressional District. This is Sam. Hopefully, he's good
throughout this... uh... testimony, but I, I really appreciate the conversation on an issue that's so
important to my state, to all of us across the country. But in Colorado, we're dealing with unique
challenges as we've seen climate continue to increase costs for insurance and because of the climate
disasters that are, have been coming throughout Colorado, increased wildfires and hail. This is Davis.
He's not being as good as the baby here, buddy. And so our state is being hit with not just an
undersupply of housing, but also the rising insurance costs. We've seen that some people are unable to
get insurance at all. And so in the short, right now, we're actually 100,000 homes short from what's
needed, and the premiums for insurance are nearly up 60%. The number one driver is from hail damage.
And so we know we're seeing this crisis across the country, and nationally prices have surged nearly
50%, and rent is up over 25% over the last five years. So, unfortunately, instead of actually addressing
these challenges, the Trump administration has delayed housing funding, undermined the agency's task
with housing assistance, and the president has proposed slashing housing investments across the

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country. This would be devastating to Colorado and our urban communities, but also especially our rural
communities. We've also seen an increase in cost because of the instability with tariffs and the rising
costs there as well. So Mr. Lipsetz, as we've seen more extreme climate driven natural disasters across
the country and, unfortunately, the move to eliminate the BRIC program, which is invest in pre-disaster
mitigation and strengthens our resiliency. I, since I led a letter, you know, opposing this and demanding
an answer and still haven't received anything from the administration on their move to do this. I, can you
please answer, to take a stab at it since we haven't heard back, and what opportunities the BRIC program
provided and how important it is?

01:42:36 - 01:43:21

Mr. David Lipsetz, President and Chief Executive Officer, Housing Assistance Council

Uh, well, as I said to your colleague from Michigan, uh, just a bit ago, BRIC program's not something I
have expertise in. It's not a program I know well. I know that most of the work we do at the federal level,
we don't have a lot of regulatory control over insurance and insurance costs, but that the borrowers that
we work with, um, are facing much higher increases than you just described because it's mostly in the
multifamily sector, uh, are facing significant costs from that. Our effort, uh, uh, at the federal level has
been more for resiliency. We've called for better, uh, per unit funding for programs so that we can get
ahead of disaster, so that we can make the homes more resilient and be able to work with the insurance
companies to bring that cost down. But BRIC is, again, not a, not a program I know well.

01:43:25 - 01:44:10

Rep. Brittany Pettersen (D-CO-07)

Well, thank you for answering that. I, I know it's important when we look at building resiliency and how
we're building new types of homes and, and thinking about things differently with climate change. And
the Trump administration's budget proposal eliminates the majority of rural housing programs, including
Section 502, the single-family direct loans, the Section 523 mutual and self-help housing grants, and the
523 land development loans, which is alarming to me when I think about the challenges some of my
mountain communities are facing when we've seen an increase in, uh, people moving there as they're, as
they're able to work remotely and people who have lived there their entire lives being unable to stay in
their communities. So can you speak on the effectiveness of these housing programs and the impacts
to our rural communities?

01:44:15 - 01:45:16

Mr. David Lipsetz, President and Chief Executive Officer, Housing Assistance Council

Uh, I would love to. The, the proposal in the President's budget would be devastating for rural
communities. To zero out the programs that are funding some of the only development happening in

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those towns, uh, would be an unconscionable move, um, for those folks. Uh, I, I have to commend the
House, uh, and the leadership in the House now of the, the mark that you guys put together for the
budget, restoring some of those programs. So thank you very much. Breathe a small sigh of relief.
Hopefully, we're not talking about zeroing out one of the, some of the only production and preservation
programs, uh, that, uh, Colorado families and others, uh, are depending on. Specific to the 502 direct
program, this is an extraordinarily effective program where you're taking families and some of the lowest
credit score levels with modest income, putting them into home ownership for only about $9,000 per
unit for a lifetime.

01:45:17 - 01:45:18

Committee Clerk, staff, Committee Staff

Time has expired.

01:45:19 - 01:45:21

Rep. Brittany Pettersen (D-CO-07)

Oh, thank you, Madam Chairwoman, and thank you for your comments.

01:45:22 - 01:45:28

Vice Chairwoman Monica De La Cruz (R-TX-15)

The chair now recognizes the gentleman from Iowa. Mr. Nunn is recognized for five minutes.

01:45:29 - 01:47:22

Rep. Zachary Nunn (R-IA-03)

Well, thank you very much, Madam Chairwoman, for holding this, and thank you very much for the panel
being here talking on a very important issue, affordable housing, particularly rural affordable housing in
places like Iowa. Iowa, like much of America, faces a growing affordable housing crisis. Nearly 40% of
Iowans spend at least a third of their overall take home salary just on being able to afford a place to live,
and it's not that expensive, my friends, in Iowa. Our rural communities are already grappling with
population decline and economic strain, risk of losing the very housing that keeps seniors, families,
working Iowans, farmers rooted in our most rural communities. And my constituents are not asking for a
handout. Let's be clear. They're asking for a fair chance to live where their parents and their
grandparents worked, where they worshiped, where they started a new life. Modernizing USDA's delivery
system, expanding loan terms from two to five years, and allowing funding for site development
activities like surveying and design, these reforms don't represent radical ideas, they represent common
sense. They help us root out fraud and they advance meaningful reform. We recognize this common

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sense in Iowa, which is why I've worked with my friend across the aisle, ranking member Cleaver here, on
delivering bipartisan reforms to USDA's rural housing program. And so, Mr. Lipsetz, I'm gonna turn to
you. I know you're the Democrats' witness, but I think we are looking for comprehensive bipartisan
solutions here. One of the programs we're reviewing is section five one five, which just happens to be the
area code for rural Iowa and Des Moines, a program that Iowa adopted earlier. Today, the state manages
about 180 properties and more than 3,600 apartment units under this program. These properties provide
critical housing in towns where no other affordable housing option exists, but we're losing them, and
we're losing them quick. When you work with many of these properties that you're working with today,
what challenges do you see in recapitalizing them?

01:47:23 - 01:49:09

Mr. David Lipsetz, President and Chief Executive Officer, Housing Assistance Council

Thank you for your question, Congressman. And I think, as you may have heard throughout this hearing,
you'd be hard pressed to pick a Democratic or Republican witness out. It might have been who invited
us, but there's been an extraordinary amount of continuity across in the same way that your work with
Congressman Cleaver represents the Strategy and Investment in Rural Housing Act. It lays out an
authorization for programs that are needed for that capitalization. You're authorizing 200 million a year
for the MPR program at USDA, which would do exactly what you just called for. You would if we gain the
support of the rest of the members around, that bill also does one of the most fundamental elements
you could do for the multifamily housing programs at USDA, which is to decouple rental assistance from
the mortgage. The moment you pay your last mortgage payment, you have lost your ability to get that
very modest subsidy to continue to house folks who are in the building today. Decouple the two, allow
for the rental assistance to continue, and you have helped a small business person in Iowa or someone
else whose their business just happens to be owning property and renting it out to continue to work.
Without that reform, the 380,000 units that remain are gone in twenty years. My organization has done
that analysis. Two years from now, 2027, the rate of decline of the program is gonna skyrocket. It's crisis
time. Like, we need action on that, and a lot of it shows up in the Strategy and Investment in Rural
Housing Act that you've been involved with, and I'm thrilled to see you pushing that agenda.

01:49:10 - 01:49:39

Rep. Zachary Nunn (R-IA-03)

Mr. Lipsetz, thank you, and I think you're absolutely right. This is a crisis we can avert if we start working
on it today. And again, I want to say thank you to the bipartisan effort on this. Mr. Maute, I'll turn to you,
the work that you have done as well. One of the challenges that I think we've noted here is outdated
technology and limited USDA staffing undermining the government's ability to track compliance waste,
fraud, and abuse, and then USDA becomes a, you know, roadblock for a lot of this rather than an aid.
Could you talk to us a little bit about what we could do to help fix the USDA challenges?

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01:49:39 - 01:50:28

Mr. Ian Maute, Director of Development, Buckeye Community Hope Foundation, on behalf of the
Council for Affordable and Rural Housing (CARH)

Absolutely. Thank you for the question. So, yes, RD is full of great people and great staff that care a lot
about what they do. They are certainly hampered by their outdated technology. Their IT is, no
exaggeration, 35 to 40 years behind. Us as borrowers and owners can't simply go on and look at a loan
balance. look at a loan balance, we have to contact someone to to do that for us. Um, so, it, one,
investments in in IT, investments in staff, and training, uh, would go a long, a long way to speed up the,
the approval processes that we need to develop the housing that we build. Um, at CARH, we met with
both, both USDA and HUD staff early this year and, uh, and presented memos to them on ways to, to
improve their, their procedures and their, and their, their work that, that they do. And, uh, we, we have
submitted those to the committee for review as well.

01:50:29 - 01:50:36

Rep. Zachary Nunn (R-IA-03)

Thank you very much. This is coming directly from my homeowners, my property builders in Iowa, as
well as those who want to rent. Let's have a stronger going forward. Thank you, Madam Chair, for the
opportunity to join.

01:50:37 - 01:50:43

Vice Chairwoman Monica De La Cruz (R-TX-15)

The gentlewoman from Oregon is now recognized, Ms. Bynum, for five minutes.

01:50:44 - 01:51:43

Rep. Janelle S. Bynum (D-OR-05)

Thank you, Madam Chair. USDA Rural Housing Service and Federal Housing Administration programs
serve as crucial lifelines for homeownership in rural America. And rural communities face unique
challenges with limited access to credit, which restricts funding options for potential homebuyers.
These federal programs also provide affordable financing options that wouldn't otherwise exist in many
rural communities. And I believe that we should look to find ways to strengthen these programs and not
cut them so that they are reaching more families. My question is for Mr. Lipsetz. What specific
improvements to USDA Rural Housing Service and FHA programs would you recommend to better serve
rural home buyers? And how can we streamline these programs to make them more accessible while
ensuring they're adequately funded and staffed to meet growing demand in underserved rural markets?

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01:51:44 - 01:53:06

Mr. David Lipsetz, President and Chief Executive Officer, Housing Assistance Council

Congresswoman, thank you for the question. Um, very specifically, uh, extend the loan terms of the 502
loan up to 40 years to help more households qualify. Allow USDA to release 502 borrowers from liability
when their loan has assumed or transferred to a new borrower. Clarify for them that homeowners with a
Section 502 loan can operate in-home child care centers and the other things which are very common in
rural places. We use our homes for many things, including our small businesses. Allow for properties
with existing ADUs to be eligible, also for the 502 guarantee program. These are all common sense
bipartisan reforms that, um, we just talked about the Strategic Investment in Rural Housing Preservation
Act, which your ranking member and, um, colleague have supported. There is a Rural Housing Service
Reform Act which takes all of those principles and expands it to include the things I just listed for USDA
single-family housing programs. This is often the only loan that's happening for rural homeowners to be
able to use in some of these towns. Take those away, and we're going to significantly reduce the number
of homeowners in small towns building generational wealth and housing their families in a decent
manner.

01:53:07 - 01:53:29

Rep. Janelle S. Bynum (D-OR-05)

Thank you. Also, my second question, Mr. Lipsetz, is President Trump's proposed budget cuts to the
USDA by 7 billion dollars and the Department of Housing and Urban Development by 33 billion dollars.
Do you think that this will make these programs more effective at helping to lower the cost of housing or
less?

01:53:30 - 01:53:32

Mr. David Lipsetz, President and Chief Executive Officer, Housing Assistance Council

Uh, thank you for your question. Far less.

01:53:33 - 01:53:33

Rep. Janelle S. Bynum (D-OR-05)

Mhmm.

01:53:34 - 01:54:33

Mr. David Lipsetz, President and Chief Executive Officer, Housing Assistance Council

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Um, what we do as rural housing folks is we are seeding local economies with, um, housing preservation
and production that allows the private market to grow. These are places where private market is not
functioning well and needs a bit of gas in the tank through CDFIs, through the programs that USDA and
HUD. If you can get that dollar to a local community, the members in CARH who's next to me can take
those and use them as private owners to continue to develop. But right now, the level of dysfunction, um,
in some of these local economies are not allowing them to move forward. If you take that little... little, by
the, uh, prospect of the whole federal government, if you take that little bit of subsidy out, you're never
going to build a private market to function there, and you're certainly not going to house the folks who
are there today who need it right now.

01:54:34 - 01:54:43

Rep. Janelle S. Bynum (D-OR-05)

So do you expect rural homebuyers would be benefited by cuts to programs designed to address rural
housing affordability issues?

01:54:44 - 01:54:58

Mr. David Lipsetz, President and Chief Executive Officer, Housing Assistance Council

Certainly not. And I commend the House on their mark, uh, of having restored many of those programs
compared to the President's budget. It's, it, it was a bold move on your part and much appreciated from
small town perspective.

01:54:58 - 01:55:39

Rep. Janelle S. Bynum (D-OR-05)

Thank you. Um, Madam Chair, it's critical that we use our responsibility as members sitting on this
committee to examine the root causes of why less and less people, especially younger Americans and
people in rural areas, believe that the path to homeownership is becoming unattainable. I think, uh,
Madam Chair, it's critical that we use our responsibility as members sitting on this committee to
examine the root causes of why less and less people, especially younger Americans and people in rural
areas, believe that the path to home ownership is becoming unattainable. And I think everyone on this
committee can agree that we're going through a housing crisis in this country. And when the cost of
building and buying a home is at record highs, we should be bolstering home ownership and home
building programs, not cutting them. So, let's make owning a home attainable, an attainable goal for all
Americans. And thank you, Madam Chair. I yield back.

01:55:40 - 01:56:05

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Vice Chairwoman Monica De La Cruz (R-TX-15)

I would like to thank all the witnesses for their testimony today. Without objection, all members will have
five legislative days to submit additional written requests for the witnesses to the chair. The questions
will be forwarded to the witnesses for their response. Witnesses, please respond no later than July 17th,
2025. This hearing is now adjourned. [Gavel]

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