WASHINGTON — After years of watching the nation's affordable housing stock deteriorate and disappear, Congress is moving to pass one of the most important pieces of housing legislation in years.
On Thursday, the House Committee on Financial Services will hold its first legislative hearing on a proposal by Chairman Barney Frank, D-Mass., to establish a National Affordable Housing Trust Fund.
The bill, HR 2895, creates a permanent federal funding source to help construct, renovate and preserve 1.5 million units of rental housing for low-income families over the next 10 years. The trust also would assist first-time homebuyers with down payments and closing costs.
The fund would provide up to $1 billion a year for states and local governments to award grants to developers and organizations that agree to build or rehabilitate housing that serves low-income families. For every $2 of trust fund money used, the bill requires a $1 match of state, local or private funds.
The fund wouldn't increase government spending or taxes because it would be financed mainly through contributions from mortgage finance giants Fannie Mae and Freddie Mac and from the Federal Housing Administration.
Similar bills have been kicked around Capitol Hill for years without success. But the proposal, which would be the largest expansion of federal housing programs in decades, appears to have found new life and support in the Democratic-controlled Congress.
Nine Republicans are co-sponsoring the measure, which reflects a shared concern about the affordable housing shortage and a growing urgency to address the problem.
"The reason you're seeing more bipartisan support is because the housing crisis crosses the bounds between cities and suburbs and, as a result, Democrats and Republicans," said Peter Dreier, director of the Urban & Environmental Policy Program at Occidental College in Los Angeles. "Twenty years ago, this was an urban issue, but as more poor people move to the suburbs, it has become a suburban issue also."
States and local governments have established hundreds of similar housing trusts across the country over the last few decades that have helped fund hundreds of millions of dollars in affordable housing.
But those efforts haven't kept pace with the growing need because "there's no way states or local governments have the financial capacity to do what the federal government can," Dreier said.
For every new affordable housing unit constructed, two are demolished, abandoned or become condominiums or expensive rentals, according to the John D. and Catherine T. MacArthur Foundation.
The lack of affordable housing makes it very hard for low-income workers to adequately house their families and more difficult for employers to recruit and retain workers.
About 200,000 affordable apartments for which tenants pay less than 30 percent of their income for rent and utilities are lost in the U.S. each year, said Nicolas Retsinas, director of Harvard's Joint Center for Housing Studies.
A new report by the center found that "the government has made little progress in stopping the loss of low-cost rentals," despite $4.7 billion in federal tax credits which helped renovate 55,000 affordable apartments and construct 78,000 more in 2005.
In 2005, 6 million impoverished households used most of their monthly earnings for housing or were living in substandard conditions. That's an increase of 16 percent, or 817,000 families, since 2003.
Hardest hit were the estimated 9 million-plus households earning less than 30 percent of area median income. In 2005, there were only 6.2 million homes that these households could afford, according to the National Low-Income Housing Coalition.
Because of that hefty shortfall, the legislation requires that 75 percent of trust fund money go to assist families earning below 30 percent of area median income. That would be less than $20,500 for a family of four in Kansas City, Mo., or less than $19,300 for the same size family in Charlotte, N.C., according to HUD figures.
Depending on the local cost of living, service workers such as cashiers, child care and home health workers, janitors, security guards and nursing home staff could find themselves in the 30 percent group.
If the House Financial Services Committee passes the trust fund measure by the end of July, it could be up for a full floor vote in September, said Steven Adamske, a Democratic committee spokesman.
Last week, the House passed by a vote of 333-83 legislation by Rep. Maxine Waters, D-Calif., to expand by 100,000 the number of families served in HUD's "Section 8" Housing Choice Voucher program, the nation's main rental assistance program.
Companion legislation for the trust fund and Section 8 bills have been introduced in the Senate by Russ Feingold, D-Wis., and referred to the Senate Committee on Banking, Housing and Urban Affairs.
The Bush administration opposes the Section 8 bill, but hasn't taken a position on the trust fund legislation.
"We are studying the legislation and look forward to working with Chairman Frank because we share the goal of creating more affordable housing," said HUD spokeswoman Antoinette Perry-Banks.