[House Hearing, 119 Congress]
[From the U.S. Government Publishing Office]


                  HOUSING IN THE HEARTLAND: ADDRESSING
                        OUR RURAL HOUSING NEEDS

=======================================================================

                                HEARING

                               	BEFORE THE

                 SUBCOMMITTEE ON HOUSING AND INSURANCE

                                 OF THE

                    COMMITTEE ON FINANCIAL SERVICES
                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED NINETEENTH CONGRESS

                             FIRST SESSION

                               __________

                             JUNE 12, 2025

                               __________

                           Serial No. 119-28

       Printed for the use of the Committee on Financial Services
       
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                            www.govinfo.gov
                            
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                   U.S. GOVERNMENT PUBLISHING OFFICE                    
60-985 PDF                  WASHINGTON : 2025                  
          
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                 HOUSE COMMITTEE ON FINANCIAL SERVICES

                    FRENCH HILL, Arkansas, Chairman

BILL HUIZENGA, Michigan, Vice        MAXINE WATERS, California, Ranking 
    Chairman                             Member
FRANK D. LUCAS, Oklahoma             SYLVIA R. GARCIA, Texas, Vice 
PETE SESSIONS, Texas                     Ranking Member
ANN WAGNER, Missouri                 NYDIA M. VELAZQUEZ, New York
ANDY BARR, Kentucky                  BRAD SHERMAN, California
ROGER WILLIAMS, Texas                GREGORY W. MEEKS, New York
TOM EMMER, Minnesota                 DAVID SCOTT, Georgia
BARRY LOUDERMILK, Georgia            STEPHEN F. LYNCH, Massachusetts
WARREN DAVIDSON, Ohio                AL GREEN, Texas
JOHN W. ROSE, Tennessee              EMANUEL CLEAVER, Missouri
BRYAN STEIL, Wisconsin               JAMES A. HIMES, Connecticut
WILLIAM R. TIMMONS, IV, South        BILL FOSTER, Illinois
    Carolina                         JOYCE BEATTY, Ohio
MARLIN STUTZMAN, Indiana             JUAN VARGAS, California
RALPH NORMAN, South Carolina         JOSH GOTTHEIMER, New Jersey
DANIEL MEUSER, Pennsylvania          VICENTE GONZALEZ, Texas
YOUNG KIM, California                SEAN CASTEN, Illinois
BYRON DONALDS, Florida               AYANNA PRESSLEY, Massachusetts
ANDREW R. GARBARINO, New York        RASHIDA TLAIB, Michigan
SCOTT FITZGERALD, Wisconsin          RITCHIE TORRES, New York
MIKE FLOOD, Nebraska                 NIKEMA WILLIAMS, Georgia
MICHAEL LAWLER, New York             BRITTANY PETTERSEN, Colorado
MONICA DE LA CRUZ, Texas             CLEO FIELDS, Louisiana
ANDREW OGLES, Tennessee              JANELLE BYNUM, Oregon
ZACHARY NUNN, Iowa                   SAM LICCARDO, California
LISA McCLAIN, Michigan
MARIA SALAZAR, Florida
TROY DOWNING, Montana
MIKE HARIDOPOLOS, Florida
TIM MOORE, North Carolina

                      Ben Johnson, Staff Director

                                 ------                                

                 SUBCOMMITTEE ON HOUSING AND INSURANCE

                     MIKE FLOOD, Nebraska, Chairman

MONICA DE LA CRUZ, Texas, Vice       EMANUEL CLEAVER, Missouri, Ranking 
    Chairwoman                           Member
JOHN W. ROSE, Tennessee              NYDIA M. VELAZQUEZ, New York
WILLIAM R. TIMMONS, IV, South        RASHIDA TLAIB, Michigan
    Carolina                         AYANNA PRESSLEY, Massachusetts
RALPH NORMAN, South Carolina         RITCHIE TORRES, New York
ANDREW R. GARBARINO, New York        SYLVIA R. GARCIA, Texas
SCOTT FITZGERALD, Wisconsin          NIKEMA WILLIAMS, Georgia
MICHAEL LAWLER, New York             BRITTANY PETTERSEN, Colorado
MARIA SALAZAR, Florida               JANELLE BYNUM, Oregon
TROY DOWNING, Montana

                      C  O  N  T  E  N  T  S

                              ----------                              

                        Thursday, June 12, 2025
                           OPENING STATEMENTS

                                                                   Page
Hon. Mike Flood, Chairman of the Subcommittee on Housing and 
  Insurance, a U.S. Representative from Nebraska.................     1
Hon. Emanuel Cleaver, Ranking Member of the Subcommittee on 
  Housing and Insurance, a U.S. Representative from Missouri.....     3

                               WITNESSES

Mr. Richard Baier, President and Chief Executive Officer, 
  Nebraska Bankers Association...................................     4
    Prepared Statement...........................................     6
Mr. David Garcia, Policy Director, Up for Growth.................    12
    Prepared Statement...........................................    14
Mr. Ian Maute, Director of Development, Buckeye Community Hope 
  Foundation, on behalf of the Council for Affordable and Rural 
  Housing (CARH).................................................    20
    Prepared Statement...........................................    23
Mr. David Lipsetz, President and Chief Executive Officer, Housing 
  Assistance Council (HAC).......................................    55
    Prepared Statement...........................................    57

                                APPENDIX
                              LEGISLATION

H.R. ----, the Strategy and Investment in Rural Housing 
  Preservation Act of 2025.......................................   100

 
      HOUSING IN THE HEARTLAND: ADDRESSING OUR RURAL HOUSING NEEDS

                              ----------                              


                        Thursday, June 12, 2025

             U.S. House of Representatives,
             Subcommittee on Housing and Insurance,
                            Committee on Financial Services
                                                    Washington, DC.

    The subcommittee met, pursuant to notice, at 1:30 p.m., 
2128 Rayburn House Office Building, Hon. Mike Flood [chairman 
of the subcommittee] presiding.
    Present: Representatives Flood, De La Cruz, Rose, Timmons, 
Fitzgerald, Downing, Cleaver, Tlaib, Williams of Georgia, 
Bynum, Pressley, and Pettersen.
    Also present: Representative Nunn.
    Chairman Flood. The Subcommittee on Housing and Insurance 
will come to order. 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 
days within which to submit extraneous materials to the chair 
for inclusion in the record.
    I now recognize myself for 5 minutes for an opening 
statement.

     OPENING STATEMENT OF HON. MIKE FLOOD, CHAIRMAN OF THE 
 SUBCOMMITTEE ON HOUSING AND INSURANCE, A U.S. REPRESENTATIVE 
                         FROM NEBRASKA

    First of all, I would 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 have 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 is 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 fewer 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 does not 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 to higher 
labor costs overall. Again, these costs are passed down to the 
home buyer or the renter.
    However, as we examine what drives costs in rural housing 
markets, we will also see some common themes that we have 
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's start 
and drive up costs; number two, build America, buy America 
requirements that drive up the cost of critical construction 
materials and appliances, sometimes 20, even 40 percent more 
than otherwise necessary; Davis-Bacon requirements, that from 
what I have 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 3 
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 
United States of Agriculture's (USDA's) Rural Housing Service 
(RHS). The RHS operates programs under Title V of the U.S. 
Housing Act of 1949. The Section 515 program provides 
affordable 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 programs, which I 
am sure will be a subject of discussion today with our 
witnesses and our members. I am excited to dig deeper into each 
of these issues today, and I look forward to our witnesses' 
testimony.
    With that, I yield back.
    Chairman Flood. The chair now recognizes the ranking member 
of the subcommittee, Mr. Cleaver, for 5 minutes for an opening 
statement.

 OPENING STATEMENT OF HON. EMANUEL CLEAVER, RANKING MEMBER OF 
       THE SUBCOMMITTEE ON HOUSING AND INSURANCE, A U.S. 
                  REPRESENTATIVE FROM MISSOURI

    Mr. Cleaver. Thank you, Mr. Chairman. I also want to thank 
you for giving a great deal of your time to this and other 
issues related to contemporary housing problems.
    I represent the 5th 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 at 
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 percent of the 
United States' population and growing, and covers more than 90 
percent of the U.S. landmass. 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 1/3 of rental units in rural America are 
at least 55 years old.
    Preserving an 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.
    Strong public investment and public and private 
partnerships are now needed. Chairman Flood and I have spent 
time this week exploring ways that Housing and Urban 
Development's (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 
constitutes the only affordable rental housing available. These 
are low-income veterans, disabled individuals, and fixed-income 
persons who need help and know housing there is available.
    At the same time, the Administration's cuts to USDA rural 
development staff are having a detrimental impact. Office 
closures and dramatic staff reductions do not create 
efficiency; they create a backlog. My hearing concerning 
reports of degraded services and impaired programs at USDA 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 program. This 
includes the Section 502 Direct Loan Program, which has helped 
more than 2 million individuals 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.
    Chairman Flood. 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 (CARH); and Mr. David Lipsetz, the President 
and CEO of the Housing Assistance Council (HAC).
    We thank each of you for taking the time to be here. Each 
of you will be recognized for 5 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 5 minutes for your 
oral remarks.

 STATEMENT OF MR. RICHARD BAIER, PRESIDENT AND CHIEF EXECUTIVE 
             OFFICER, NEBRASKA BANKERS ASSOCIATION

    Mr. Baier. 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 
9 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 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 percent of Nebraska's housing 
units were constructed before 1939. When the data is broken 
down even further via the Rural Urban Continuum Code, the data 
highlights that 28 to 36 percent 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 factors. 
Fundamentally, Nebraska, like other rural areas of our great 
country, lacks supplies of material vendors, contractors, and 
subcontractors necessary to build new housing units.
    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. In most cases, the only 
way to build 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 service individuals with 
incomes below 60 percent of the area median income. Conversely, 
the National Housing Trust Fund is limited to those potential 
tenants with incomes below 30 percent of Area Median Income 
(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 25 percent to the overall 
cost of construction.
    Current government housing programs also have substantial 
administrative and reporting burdens, as mentioned by 
Congressman Flood, such as lengthy and expensive environmental 
assessments. In response to input from member banks, the 
Nebraska Bankers Association created our 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 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 to date we have 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 dialog.

    [The prepared statement of Mr. Baier follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman Flood. Thank you, Mr. Baier.
    Mr. Garcia, you are now recognized for 5 minutes for your 
oral remarks.

 STATEMENT OF MR. DAVID GARCIA, POLICY DIRECTOR, UP FOR GROWTH

    Mr. Garcia. 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. My name is David Garcia. I am the Policy 
Director at Up for Growth and Up for Growth Action. We are a 
non-profit, non-partisan organization focused exclusively on 
increasing the supply of housing across the country. We have 
over 350 member organizations nationwide, which include 
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 are 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 percent of rural renters are cost-
burdened, and half of those renters are considered severely 
cost-burdened.
    Buying a home has become more difficult as well. In the 3-
years following the pandemic, home prices in non-metro areas 
grew by about 36 percent, which is much higher than in 
urbanized areas and these trends have not gone unnoticed. 
Recent polling shows that 80 percent of rural residents believe 
that housing affordability is deteriorating, and 76 percent 
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 
percent, of rural households report an annual income below 
$25,000, compared to 18 percent 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, making it harder 
for new housing development to pencil out, especially when 
considering the need to upgrade infrastructure such as water, 
sewer, power, as well as roads.
    Many rural communities also lack 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 is out of reach for many communities.
    Home building in rural America can be more expensive, as 
noted 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 construction labor, contractors, 
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. 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 (Not-
In-My-Back-Yardism) 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 percent 
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 home ownership through the rehabilitation of 
existing stock for moderate income home buyers.
    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.
    All of these proposals enjoy bipartisan support, including 
from members here today, such as Chairman Flood, Ranking Member 
Cleaver, Member Pettersen. 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.
    I want to thank you again for the opportunity to contribute 
to today's hearing, and I look forward to continued dialog with 
the subcommittee.

    [The prepared statement of Mr. Garcia follows:]
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman Flood. Thank you, Mr. Garcia.
    Mr. Maute, you are now recognized for 5 minutes for your 
oral remarks.

 STATEMENT OF MR. IAN MAUTE, DIRECTOR OF DEVELOPMENT, BUCKEYE 
    COMMUNITY HOPE FOUNDATION, ON BEHALF OF THE COUNCIL FOR 
                  AFFORDABLE AND RURAL HOUSING

    Mr. Maute. 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 interests of for-profit 
and non-profit developers, owners, management companies, 
lenders, and investors who all participate in the affordable 
rental housing 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 non-profit 
corporation that develops and facilitates affordable housing 
for low-income families. I am 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 3/4 of all Section 515 
mortgages will mature, and with it, the end of the Section 520 
rental assistance contracts, straining over 250,000 families, 
elderly persons, without the ability to house themselves. Under 
current law, when a Section 515 mortgage expires, the Section 
521 RA also expires. Therefore, it is critical to establish 
legislative authority to preserve the rental assistance after 
mortgage maturity. With roughly 75 percent 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 and properties where a 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 Stand-Alone 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 this program, as it 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 are 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 percent 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 produced.
    In multifamily rental housing, the 1-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 over 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 that 
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 percent of new zones be rural, 
and that 50 percent of capital directly support housing, jobs, 
and infrastructure ensures that rural areas are----
    Chairman Flood. I am sorry, Mr. Maute----
    Mr. Maute. Yes.
    Chairman Flood [continuing]. your time has expired.
    Mr. Maute. Thank you.
    Chairman Flood. We would encourage you to submit that for 
the record----
    Mr. Maute. Sure.
    Chairman Flood [continuing]. which we will gladly accept.
    Mr. Maute. Sure thing.

    [The prepared statement of Mr. Maute follows:]
   [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
   
    Chairman Flood. With this, Mr. Lipsetz, you are now 
recognized for 5 minutes for your oral remarks.

 STATEMENT OF MR. DAVID LIPSETZ, PRESIDENT AND CHIEF EXECUTIVE 
              OFFICER, HOUSING ASSISTANCE COUNCIL

    Mr. Lipsetz. 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 are all 
singing the same tunes 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 have all discussed, 20 percent 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 have 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 percent below the rest 
of the Nation. Poverty remains stubbornly high at over 80 
percent of the persistent poverty counties in rural areas. This 
reality is neither a recent nor, I would suggest to you, an 
accidental trend. It is 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.
    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, 
government sponsored enterprises (GSEs), Community Reinvestment 
Act (CRA), Low-Income Housing Tax Credit (LIHTC), Opportunity 
Zones. All these things play positive roles in our housing 
finance system, and 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 is 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 this 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, non-profit, 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. Five-
point-six million rural households cannot afford the home they 
live in. This includes millions of homeowners facing mortgages 
and utility bills that eat up more than 30 percent of their 
income and 44 percent of rural renters that cannot afford their 
own rent. If you are not already aware, the affordability 
crisis has driven a 30 percent increase in rural homelessness 
over just the last 3 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 gap between the cost of 
construction and the lower appraised values of many rural 
homes.
    Second, bipartisan momentum exists for modernizing housing 
programs that are designed for rural America and USDA's Rural 
Housing Service. Housing champions in both chambers and on both 
sides of the aisle have assembled a package of commonsense 
improvements using public-private partnerships, expanding the 
roles of Community Development Financial Institutions (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 also noted that they are supported by bipartisan 
legislation on the Senate side by Senators Moran and Shaheen. 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 us decouple rental 
assistance.
    Once again, HAC appreciates the subcommittee's time and 
your attention to this topic. I am looking forward to today's 
discussion.

    [The prepared statement of Mr. Lipsetz follows:]
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman Flood. Thank you, sir.
    We will now turn to member questions. I now recognize 
myself for 5 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 non-
profit 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 
multifamily unit costs are capped at $250,000 per unit. Instead 
of having an ongoing requirement that any tenant meets 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 is a fundamental question. Why? It 
is 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 home buyer purchasing 
a home, do you think those requirements would add cost and 
bureaucracy to the program?
    Mr. Baier. Yes, Congressman, I do believe they would add 
significant cost to the way that we administer our housing plan 
in Nebraska.
    Chairman Flood. 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?
    Mr. Baier. Yes, Congressman, I do believe it would add cost 
significantly.
    Chairman Flood. What if the program included requirements 
that all contractors and subcontractors on the project tracked 
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?
    Mr. Baier. 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.
    Chairman Flood. What if the program included a requirement 
that 25 percent of total labor hours on any project be done by 
low-income workers and that 5 percent of labor hours must be 
done by a business that has one of the following 
characteristics: Number one, is at least 51 percent owned by 
low-income people; number two, had at least 75 percent of the 
company's labor hours performed by a low-income worker; or 
number 3, is at least 51 percent owned by workers in Section 8 
assisted housing? Do you think those requirements would 
increase the program's costs?
    Mr. Baier. Yes, I do believe that would increase costs 
significantly, Congressman.
    Chairman Flood. 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 am 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 in buildings 
are all goals that I can understand. Every one of those 
requirements carries a cost, and we need to be smarter about 
weighing the tradeoffs 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 5 minutes for questions.
    Mr. Cleaver. 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 have represented towns where the police chief was also 
the fire chief and also the librarian. So when those programs 
are available and we do not get rural communities requesting 
some help because we do not have the assistance to even provide 
help, they do not have many places to go.
    HUD programs were originally designed to serve cities and 
urban areas. What changes would you suggest that Congress could 
make to broaden HUD programs to smaller and rural communities?
    Mr. Lipsetz. Mr. Cleaver, thanks for your question. It is 
very similar to Chairman Flood's, right, in that we are talking 
about the intent of programs that 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 happens, that dynamic exists, 
is because there is not enough money in these programs. When 
the pie gets small, people fight fiercely for their piece. If 
we had commitment to enough funding for people to live in a 
decent and humane manner across this country, then we would not 
have those fights for those small pieces.
    I think one of the things that best answers your question, 
Ranking Member Cleaver, is that we help those smaller 
communities build the capacity to apply for and receive the 
funds we are talking about. There are HUD programs to do it. 
Rural Capacity Building is a very specific one. I would also 
suggest Rural Community Development Initiative Grants (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 have finally gotten rid of a 
lot of these regulations, but very much today's process.
    Mr. Cleaver. So HUD and USDA should work together in order 
to create whatever technical assistance would be needed. Since 
these programs do, in many cases, actually overlap one another, 
is that an alliance that you think would help solve the 
problem?
    Mr. Lipsetz. I think I am one of the Nation's very few 
people who have worked in both those buildings, 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 does not 
preclude us from putting HUD and USDA together to do alignment. 
There is no reason that you could come up with that a property 
being built needs more than one environmental review. I am 
sorry. If you are 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 the small town that you grew up in. I 
have seen that picture of your house that you grew up in 
hanging in your office, and that is exactly what we need to be 
able to do for those communities.
    Mr. Cleaver. Thank you. Thank you very much. I remember 
quoting you about not trying to implement programs by putting 
one of these agencies inside the other or taking what they do 
and merging them.
    Mr. Garcia, do you think that the requirements such as 
Davis-Bacon prevailing wages are making it difficult for rural 
communities to use HUD programs for housing?
    Mr. Garcia. Of course, yes, I agree with that. I think 
there are two reasons for that. The first is that it kind of 
shrinks the labor pool, particularly of contractors who are not 
set up to track those kinds of requirements. As mentioned 
earlier, there are a lot of 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.
    Mr. Cleaver. Thank you.
    Chairman Flood. The gentleman yields back.
    The chairman of the full committee, Mr. Hill of Arkansas, 
is now recognized for 5 minutes.
    Chairman Hill. 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 rural areas. I thank the Chairman and the 
Ranking Member for collaborating on this hearing.
    It is pretty challenging to do. I was a banker in rural 
Arkansas for many, many years in Mississippi Delta. Chicot 
County has a population of 7,500 people today.
    When I opened the bank there, it was probably 15,000, so it 
has shrunk in 15 years to that amount. Ashley County has a 
population of 18,000 and I would not think any of those 
counties have stick-built home builders. They might have a 
custom builder of a certain amount. So the things that I have 
noted are you do not have a regular construction infrastructure 
in many rural counties and there are no comps if you build a 
new house, so you cannot get a secondary market financing on 
the loan. It is going to be a portfolio loan for the most part.
    Flood program, there are frequently homes built on bigger 
tracts of land that part of the land is in the flood plain. The 
house is not. The house is on a 40-foot hill, but you have to 
deed it out in order to be covered under Federal Emergency 
Management Agency (FEMA), so it is expensive to survey. I have 
seen some successes over those years. I have seen some grant 
programs by the Federal Home Loan Bank be helpful to that 
particularly I say a marginal multifamily developer in a rural 
area. I have seen that be a good gap filler for a construction 
loan.
    I am interested in, Mr. Maute, what are some of the biggest 
challenges that you have seen in your list of what barriers are 
in a rural situation?
    Mr. Maute. Sure. Thank you for the question. Developing and 
building housing in rural areas, as you mentioned, there are 
several challenges. The majority of the work that we do is 
through the housing credit program, attracting investors that 
are purchasing credits at the same prices as in urban areas. 
Attracting construction debt, firm debt for small communities 
is also a challenge. The projects that we build in rural areas, 
just because of the size of the markets, are 24 units, 30 
units, maybe up to 50 or 60 units, and just are not as 
attractive to our financing partners that we want to work with. 
So, putting our capital stack together can be difficult.
    On the construction side, finding high-quality, capable 
subcontractors to build the projects is an issue. We work with 
a handful of general contractors, and a lot of times they will 
have subs that are nowhere near the geographic area that we are 
in and that they will have to work on jobs simply because they 
cannot find qualified contractors in those areas. So, it runs 
the gamut from financing to construction to filling the units 
with qualified residents.
    Chairman Hill. Would you find on the capital stack side, Do 
you have any model of working in a State with a large rural 
population where the public employees fund or something in a 
State has--I would assume if you could hit some--volume is what 
causes capital to not be attracted, just like if I cannot build 
10 houses at once, I do not want to drive an hour and a half to 
this place to start a construction job. Is there some way that 
we could mobilize retirement financing or pension financing 
because of the yields, if you have it, you think the yields 
could be competitive if they were available to a long-term 
fixed-income investor?
    Mr. Maute. Yes, that is not something that we have looked 
at personally as far as raising that sort of capital, so I do 
not know if I could really speak to that.
    Chairman Hill. How about you, Mr. Baier, any comments from 
a good banker point of view?
    Mr. Baier. Mr. Hill, I think it is 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, unlike some of my 
fellow testifiers, we are not talking about 60 units in rural 
Nebraska. We are talking about one to five units, and trying to 
generate a private sector type return on those investments is 
really difficult, and that is why in many cases our banks get 
involved in CRA activities, CDFI activities, those kinds of 
activities really to be involved in that process because 
otherwise, it does not make financial sense.
    Chairman Hill. Is it also tough on the extension of water 
and sewer in these kinds of towns, too, or is that not as big a 
barrier?
    Mr. Baier. It is a huge challenge trying to develop 
buildable lots in most of our rural communities, and I am a big 
believer in eliminating blight and substandard for that reason 
and knocking down older homes.
    Chairman Hill. Right. Thank you very much. I yield back.
    Chairman Flood. The gentleman yields back.
    The gentlewoman from Georgia, Ms. Williams, is now 
recognized for 5 minutes.
    Ms. Williams of Georgia. Thank you, Chairman Flood and 
Ranking Member Cleaver, for having this very important hearing 
today. Thank you, Mr. Cleaver, the Ranking Member of this 
subcommittee, for your work on the Strategy and Investment in 
Rural Housing Preservation Act. 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.
    I might sound like a broken record because I said this the 
last time. Although I represent the fighting 5th 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 did not even have a 
police chief or a fireman. We have that one traffic light that 
only flashed in front of the high school. So, I know a little 
bit about rural housing because that is my lived experience. 
That is where I grew up. All of my family is still in the big 
city of Smiths Station, Alabama.
    Although I represent a district that is centered in 
metropolitan Atlanta, I get it. I get the need for rural 
housing. Not only just that, I came to Congress because as a 
Member of Congress, I understand that the policies that I enact 
impact the entire Nation. 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 because that home that I 
grew up in rural Alabama, it was on our family land, and we 
probably did not meet all of the regulations and all of the 
codes that needed to happen because my grandpa built that home. 
It had no indoor plumbing and no running water. There are still 
people in rural America that need us to fight for them, so I 
want to make sure that we are doing that part.
    That is why I am thankful for Congressman Cleaver and 
Ranking Member Waters' work here on these important pieces of 
legislation because it is clear that while my colleagues and I 
and the Democratic Caucus are doing everything to honor 
Homeownership Month, some of my colleagues on the other side of 
the aisle are making it so much harder for homeownership in 
rural America and underserved communities. Whether it is this 
bill that we just voted on, the one big billionaire bailout or 
whatever you want to 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 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?
    Mr. Lipsetz. 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 do not support that. My organization did an analysis some 
years ago of bank closures, and there is an astounding 
percentage of--I was trying to recall it. I was just asking--
60-something percent of the bank branches that have closed in 
the last 30 years, you do not have financial services when you 
live in places like Smiths Station, right?
    Ms. Williams of Georgia. We had one bank, but still not 
quite enough to meet the needs of everybody who needed it.
    Mr. Lipsetz. One other piece of the puzzle that I think you 
started to hint at in your opening remarks is heirs' property. 
You come from a family property that is going to be split 
unless there are significant legal documents in place, wills 
and other things. That property is going to be split and is 
going to be in danger of loss to your family and the wealth you 
have built up in it. My organization with Fannie Mae has now 
done analysis of what the extent of heirs' property is across 
the country.
    I know this is not your question, but we are desperate to 
get Congress to take a look at the risks that half a million 
families in the United States face because their property is 
tied up in an heirs' situation that they cannot gain the full 
wealth of it.
    Ms. Williams of Georgia. Mr. Lipsetz, you are right, it was 
not part of my question, but it is very important to me, and I 
actually have bipartisan legislation that I am leading with 
Congressman Byron Donalds right here on this committee to 
address heirs' properties, so I look forward to it.
    I am 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 country. 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.
    Chairman Flood. The gentlewoman yields back. The gentleman 
from Tennessee, Mr. Rose, is now recognized for 5 minutes.
    Mr. Rose. 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 am working on introducing legislation again this 
Congress which would do just that.
    Mr. Maute, in your opinion, would eliminating the statutory 
requirement for a chassis on every manufactured home increase 
the affordability and availability of these homes for rural 
America?
    Mr. Maute. Yes, I believe it would increase the 
affordability and allow units to be created cheaper and in a 
more efficient and quicker manner.
    Mr. Rose. 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 assume you would agree with 
that as well.
    Mr. Maute. Yes, yes, we have dipped our toe, personally, at 
my employer on looking at manufactured housing, and some of the 
technology and innovations are amazing and what it would allow 
us to do--to just sort of smooth out the construction process 
and make it predictable and not at the whims of weather would 
be great and would help things a lot.
    Mr. Rose. I would say remove the stigma maybe that is 
attached to the manufactured housing space. Do you think that 
is achievable as well?
    Mr. Maute. I do.
    Mr. Rose. 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? Frankly, if you will, speak to why is it--normally, I 
believe markets work. Why are markets not signaling adequately 
to cause those resources to come to bear?
    Mr. Baier. Mr. Rose, thank you for the question. I would 
tell you, for me, it is a multi-pronged approach. We have to, 
as a country, begin to embrace trade and vocational education 
as first and foremost. We also have to educate parents that a 
trade occupation is a wonderful opportunity and a wonderful 
career that does not require a 4-year college education that 
comes potentially with hundreds of thousands of dollars in 
debt. As we make investments, we need to really focus our 
technical training on helping young people understand and 
embrace those opportunities and those trades.
    Mr. Rose. I could not agree more, and our Governor in 
Tennessee, Bill Lee, has done 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 
agriculture (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?
    Mr. Baier. 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 onsite. We have a number of our community colleges 
that build one to three to five units every year and then 
auction them off. Typically, they bring more at or more than 
what the market value is of those units. So, I think as we 
think about it, we just have to get much more creative and 
invest in those opportunities. I know 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 is 
built at the community college.
    Mr. Rose. Thank you. I agree with everything you are 
saying.
    I want to just leave the panel with this thought. I am a 
farmer in a rural area, and my quest in life has been to 
reassemble the original land grant that John and Ann Lancaster 
acquired from the Revolutionary War, and I have succeeded to 
some degree in that, but as I have done so, I have 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 to 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.
    Chairman Flood. The gentleman yields back. The gentlewoman 
from Michigan, Ms. Tlaib, is now recognized for 5 minutes.
    Ms. Tlaib. Thank you so much, Chairman. Thank you all so 
much for being here.
    While my district is not rural--I love my beautiful city of 
Detroit--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 because of climate disasters, from flooding to 
fires to heatwaves. We know the climate crisis is here.
    In my district, flooding has been chronic, and many of the 
homes, to many of my seasoned residents who do not have the 
fixed income, they do not have the capability of getting the 
basement cleaned up, addressing even the increase like we are 
hearing now more than ever, mold growing in people's homes.
    In Wayne County, which is the largest county in my 
district, states of emergency have been declared, and I have 
been here since 2019, so 2019, 2021, 2023, disaster as State 
emergencies declared for severe storms and flooding. According 
to FEMA's National Risk Index, Wayne County and Oakland 
County--I have five communities in Oakland County--face risks 
from natural hazards greater than 96 percent of the U.S. census 
tracts. While 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. Redline 
communities have suffered from reduced public and private 
investment, which impacts, again, their ability to not have 
like irreparable harm, making them again very much exposed to 
heatwaves and flooding. Similarly, many rural communities have 
suffered from the same disinvestment, as you know, and the lack 
of resources and adaptive capacity.
    Mr. Lipsetz, can you explain why historically disinvesting 
in communities, rural communities, communities like mine, how 
it has made them even more vulnerable with the climate crisis?
    Mr. Lipsetz. Congresswoman Tlaib, thank you for your 
question, 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 
do not see the interests that we have that are shared across 
that geography.
    More specific to your question, places like Dearborn, 
Michigan, and others that are threatened by storms, I used to 
work for Congressman John Dingell, so I know a touch about 
Dearborn.
    Ms. Tlaib. So you know about Aviation Sub, which is that--
--
    Mr. Lipsetz. I sure do.
    Ms. Tlaib [continuing]. beautiful Detroit neighborhood 
right up against Dearborn. Both of them, it was the first time 
I have seen both of the communities coming together and saying 
we have to do something about flooding.
    Mr. Lipsetz. Yes. It is specifically what I am 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. If you take the disaster 
in North Carolina where a hurricane thousands of miles away 
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 
is what we do as Federal Government, right? We are big. We come 
in, we plop down our thing, and it is one size fits all.
    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 are going to leave places outside of major metro 
areas at tremendous risk for flooding.
    Ms. Tlaib. Yes, Detroit got some of the BRIC funding, the 
Building Resilient Infrastructure Communities program. It was 
really incredibly helpful. It was not a ton. People do not 
realize the $1 million, It is not even a dent into what is 
needed, and my district needs and relies, of course, on that 
Federal partnership.
    Earlier this year, when we did get the $1 million, 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 will impact ability for some of our 
communities? I mentioned redlining earlier, and now I feel like 
we are experiencing blue lining. I know my colleagues do not 
want to hear it, but that is what I am experiencing. I feel 
like even with our community project funding, ours got cut 70 
percent. 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, their 
political affiliation. If you can talk a little bit about, 
again, the BRIC program and why that is important.
    Mr. Lipsetz. Congresswoman, that is not a program I am 
familiar enough----
    Ms. Tlaib. That is okay.
    Mr. Lipsetz [continuing]. to speak to----
    Ms. Tlaib. I do want to emphasize to my colleagues we 
should stop blue lining. Many of Americans have so many ties to 
each other. I just do not think one community should be hurt 
because of who they voted for.
    Thank you. I yield.
    Chairman Flood. The gentlewoman yields back.
    The gentleman from South Carolina, Mr. Timmons, is now 
recognized for 5 minutes.
    Mr. Timmons. 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. Homebuilders 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 is 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.
    Mr. Garcia, what specific best practices should Congress 
consider promoting to reduce permitting-related costs and 
encourage more private development in rural communities?
    Mr. Garcia. Thank you, Congressman. I think 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 heard 
earlier, many of the requirements, while well-intended, can add 
significant costs through an extended project timeline, so that 
is a critical piece, too.
    I think also providing resources for localities 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 
approve for housing, but they do not have the resources to do 
that, and I think that is particularly true in rural 
communities where the planning capacity is not like in larger 
cities.
    Mr. Timmons. A lot of municipalities are trying to 
encourage affordable housing, but they are kind of doing it 
through a patchwork framework that creates uncertainty. When 
you do not know what the rules are and you start a project and 
they keep moving the goalposts, it is problematic.
    I guess my question is, 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?
    Mr. Garcia. Yes, I think that would be extremely helpful. 
Uncertainty is a huge barrier to development in any community, 
and to the extent a community can make the rules clear and 
precise up front, that will be a big help for getting more 
housing built.
    Mr. Timmons. Thank you for that. To you, Mr. Maute, in your 
experience working with rural communities, how does permitting 
delays or regulatory complexity affect your ability to get new 
housing projects off the ground?
    Mr. Maute. Thank you for the question. Yes, permitting 
delays, local approvals, whether it is water, sewer, tap fees, 
add a lot of uncertainty. Sometimes the goalpost is moved where 
we are anticipating one set of fees, one set of review process, 
and we go to submit our plans, our specs, and move through it, 
and it changes. So, it does create a lot of delays, a lot of 
problems, and it is mostly all tied to uncertainty, as Mr. 
Garcia stated. Knowing what something is going to be when we go 
in is paramount to our success and working with municipalities 
that understand that would also be extremely helpful.
    Mr. Timmons. Our country has seen an incredible opportunity 
using telehealth to reach rural communities that do not have 
access to good doctors. Is there a world in which we could use 
tele-inspections to streamline the permitting process, to 
streamline the inspection process? I am not saying it would 
work in every circumstance, but after maybe a year of in-person 
inspections where the contractor and the subcontractor were 
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?
    Mr. Maute. Yes, I do think that would work, and we are 
seeing it work. 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. Those inspections, those review processes were 
just as efficient, if not more, than the in-person inspections. 
I do not think anything was lost when we did that and are 
continuing to do that.
    Mr. Timmons. If somebody was incentivized to create a 
really good video that would cut down on travel time and allow 
someone to basically spend 15, 20 minutes, whereas a personal 
inspection would take hours. I just feel like that is a really 
easy, streamlined, cost-saving mechanism and delays, time is 
money, and if we could streamline that portion, I think it 
would be a step in the right direction.
    I am out of time. I thank the witnesses for being here 
today. With that, Mr. Chairman, I yield back.
    Chairman Flood. The gentleman yields back.
    The gentleman from Wisconsin, Mr. Fitzgerald, is now 
recognized for 5 minutes.
    Mr. Fitzgerald. Thank you, Chairman.
    Obviously, you are well aware we have a situation where 
there are just many young adults who cannot 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. Instead 
of the Federal Government being the answer to everything, I 
know there are some attempts at the local level, and I would 
love to hear if you are aware of some of those.
    The example I continue to cite is the Next Generation 
Housing Initiative. It is in Washington County, which is in my 
district in Wisconsin. It is a locally driven effort to expand 
affordable home ownership for middle-income families by 
developing about 1,000 units of new owner-occupied homes by 
2032. 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. What 
it does is it sets kind of a clear affordability target. It 
requires that 40 percent of the homes be sold under $340,000, 
and all of them have to be under $420,000, all right? So, I 
think there are 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 also promotes 
zoning reforms, which talk to any Wisconsin home builder right 
now, is 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.
    There are some other options, too. There is some 
volunteerism that young couples can get engaged in if they want 
to earn some of those credits.
    I think, Mr. Maute, have you heard of any of these types of 
programs? Are you aware of anything that is being done at the 
local level that is similar to this?
    Mr. Maute. Where I work, we focus solely on multifamily, so 
I am not as familiar with some of the single-family programs. 
There are some States we operate in that will have a single-
family State housing credit that folks can use. As far as on my 
day-to-day in utilizing those programs, I have not.
    Mr. Fitzgerald. Yes. Mr. Garcia, are you aware of anything? 
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.
    Mr. Garcia. I think there are a couple examples, both at 
the State level and the local level, where you have assistance 
for first-time homebuyers or just homebuyers in general. 
California has a statewide program called Dream for All. I 
think it is wildly oversubscribed, which tells you about the 
need for something like down payment assistance, and I think 
there is something to that.
    I think the challenge is, without a commensurate increase 
in housing supply, you are not necessarily going to drive the 
cost of the housing down, so the down payment assistance is 
useful. We also need to think about, okay, we need to increase 
housing supply overall.
    So, to your point about 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 zone and plan for 
smaller starter homes that we used to build pretty routinely. 
Those are the kinds of things that if we can get the market 
working right to provide those, those are going to be naturally 
more attainable than the kind of larger homes that we see going 
for kind of exorbitant prices today.
    Mr. Fitzgerald. 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 what is needed are these 
starter-type homes.
    I was just going to ask, Mr. Baier, do you see a role for--
and have you experienced in the banking industry a role for 
financial institutions on this front?
    Mr. Baier. I appreciate the question. As I begin to think 
about my State, we are seeing partnerships. To your point, 
volume is really where we are at in terms of keeping costs down 
and providing the supply of homes. We currently, under our 
Rural Workforce Housing Program, have four different towns that 
have literally contracted with one townhouse developer because 
there was not enough demand in one community. They are then 
literally pooling their resources and saying, my community will 
guarantee 12, my community will guarantee 20, and this 
developer now is ready to embrace 40 to 60 townhomes in a very 
rural area. So, we think that volume is important. Our banks 
are coupling that with, again, low-interest loans or first-time 
homebuyer loans as part of that process.
    I applaud the work that you have done with the Access to 
Credit for our Rural Economy (ACRE) Act, which would, again, 
provide another tool----
    Mr. Fitzgerald. Yes.
    Mr. Baier [continuing]. to help with lower-cost mortgages. 
I think there are a lot of opportunities out there to build 
volume and keep costs down.
    Mr. Fitzgerald. Thank you for being here. I yield back.
    Chairman Flood. Thank you. The gentleman yields back.
    The gentlewoman from Massachusetts, Ms. Pressley, is now 
recognized for 5 minutes.
    Ms. Pressley. Thank you, Chairman Flood and Ranking Member 
Cleaver, for this truly critical hearing.
    As I have said many times before, housing is the number one 
issue I hear about from my constituents in the Massachusetts 
7th, and I am sure it is 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 
totally different.
    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 lacked 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.
    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 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?
    Mr. Lipsetz. Thank you for your question, Congresswoman. At 
the beginning of this hearing, Chairman Flood gave a perfect 
description of how housers like us sitting here do not need to 
be in the business of who is moving into the unit. We need to 
provide excellent units, high quality, and if they are coming 
in with a record of having served time or other issues, that is 
not our business. That is overregulation and overreach by the 
Federal Government. We need to be able to equally house folks 
who are coming into our front doors without asking us, as the 
owners or financiers of these properties, anything about that 
personal record.
    I would gladly house the families that you are talking 
about in the units we work with, and we are able to as a CDFI 
unless there are other public moneys in the property. That is 
not my business. I am a houser, and every single American who 
knocks on the front door, who needs a place to live, that is my 
job.
    Ms. Pressley. 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?
    Mr. Lipsetz. Yes, not for my current work, but for a 
previous employer. I did see Oakland Housing Authority 
partnering with its county to do reentry programs, being able 
to set aside some of its Section 9 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, a head of household who had been 
incarcerated, to reunite with children. It is not a rural 
story----
    Ms. Pressley. Thank you.
    Mr. Lipsetz [continuing]. I am telling you.
    Ms. Pressley. Thank you. Thank you very much. So the point 
is, if we do not 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 are 
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.
    Ms. De La Cruz [presiding]. Thank you. Hello, good 
afternoon. I would like to recognize myself, Congresswoman 
Monica de la Cruz.
    I have the honor of representing a rural district in deep 
south Texas on the border, McAllen. 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 are looking for low-cost solutions. There is 
a Starbucks locally that has opened a 3D-printed building, a 
3D-printed Starbucks. It is a low-cost modular. Low-cost 
modular homes are being constructed in rural areas by 
nonprofits, ``come dream. come build'' in partnership with 
multiple U.S. banks. 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?
    Mr. Garcia. Thank you for the question, Congresswoman. 
There are a few challenges that offsite or industrialized 
construction builders face. The first is that many times local 
rules or regulations do not allow for that kind of housing to 
be sited in specific neighborhoods. So, you may have a zoning 
regulation that forbids any type of manufactured housing that 
may be rooted in kind of an outdated view of what manufactured 
housing really is or looks like.
    Ms. De La Cruz. Those would be local policies, correct?
    Mr. Garcia. Those are local, yes. We mentioned this 
earlier, but there are some outdated rules at HUD that we 
should be examining and revising as well. There is mention of 
the permanent steel chassis rule. If we were to remove that, it 
would reduce costs 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.
    Ms. De La Cruz. For the American public that is listening 
right now, what is the chassis rule?
    Mr. Garcia. So the chassis rule is essentially a rule by 
HUD that says that any home that is manufactured needs to have 
a steel chassis to be permanently--or if it is not going to be 
permanently affixed, so that it can be moved, even though the 
vast majority of manufactured homes never move once they are 
sited. So, we have an unnecessary amount of extra materials 
that go into a manufactured home that really do not need to be 
there.
    Ms. De La Cruz. What is the percentage of manufactured 
homes that actually move?
    Mr. Garcia. I think it is pretty low. I do not have a 
statistic off the top of my head, but it is shockingly low.
    Ms. De La Cruz. 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 are only building one new home for every two 
new jobs created nationally and this ratio is often worse in 
rural communities. 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.
    Mr. Garcia, again, what specific Federal programs or policy 
changes would you recommend to make rural housing construction 
economically viable for developers?
    Mr. Garcia. 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, costs of 
construction are high across the country, but 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. So, anything we can do to bring down materials 
and labor costs is going to be really important to making those 
projects work better.
    Ms. De La Cruz. Thank you. I yield back.
    I now recognize the gentleman from Montana. Mr. Downing is 
now recognized for 5 minutes.
    Mr. Downing. Thank you, Madam Chair, and I thank the 
chairman for putting this together. I really appreciate the 
constructive dialog today on barriers to rural housing 
development.
    Just a couple of stats. Montana's 2nd Congressional 
District that I represent is the largest by land mass after 
Alaska, so we have a lot of dirt and a lot of long roads. A 
couple of things I have talked about in this committee, in the 
past, but I really think about the path to ownership being that 
fundamental part of the American dream, and I think of the 
limiting factors there. 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 price out of the market and 
how important that is.
    Something that really sticks in my mind is the 24 percent 
of the current average single-family home sale price is from 
regulations across all levels of government, so things that I 
think about.
    I am going to shift gears here for a second because I would 
like to focus my initial questions on communities that are 
frequently left out of these discussions, and those are tribal 
communities. Montana is home to seven federally recognized 
Indian reservations, and each one plays a critical role to the 
local community and culture. Native American residents in 
Montana, especially those living on reservations, experience 
significantly lower homeownerships, up to 12 percent lower than 
Montana's overall population.
    I am going to start with Mr. Garcia. Can you describe the 
unique challenges that Native Americans face when it comes to 
homeownership?
    Mr. Garcia. Thank you for the question, Congressman.
    Some of the unique challenges include pretty significant 
rates of poverty. When you have that kind of impoverishment in 
any community, it is 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.
    I think the other challenge that they can face is just 
access to credit and financing sources. It is just not 
available to the tribal communities like they are to the 
broader public.
    Mr. Downing. Thank you. Mr. Lipsetz, do you have anything 
to add to that?
    Mr. Lipsetz. Thank you, Congressman. Yes, we have actually 
worked with the Northern Cheyenne Tribe in your district quite 
a bit, and it is access to credit. It is not just the 
regulatory costs that you were mentioning, 24 percent, 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 have seen that addressed well is 
there is a very strong network of native CDFIs that can de-risk 
that lending for private organizations. They are not trying to 
grab market share. They are bringing in a portion of the cost 
of the house to bring it down for the private lender, and being 
able to fund those native CDFIs is a not-small piece of the 
puzzle.
    Mr. Downing. Thank you. Back to Mr. Garcia. What 
combination of Federal housing assistance and technical support 
can help rural native communities leverage private sector 
investments?
    Mr. Garcia. I do not know if I have a good answer to that 
question. I would defer back to some of my colleagues on that.
    Mr. Downing. Mr. Lipsetz?
    Mr. Lipsetz. I am sorry, sir. Could you repeat the 
question?
    Mr. Downing. What combination of Federal housing assistance 
and technical support can help rural native communities 
leverage private sector investments?
    Mr. Lipsetz. As housers, it is the hardest 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 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 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.
    Mr. Downing. Thank you. In my last seconds here, I am going 
to switch gears to housing more generally. I will go to Mr. 
Baier. What role can public-private partnerships play in 
addressing rural housing shortages? What are some effective 
models you have seen that align private capital with local or 
regional development goals?
    Mr. Baier. 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 the various tools we have talked 
about at the State level and eliminating friction that exists 
because right now, it is almost impossible because of the 
friction to make them doable.
    Mr. Downing. Right. Thank you. Unfortunately, I have run 
out of time, so Madam Chair, I yield.
    Ms. De La Cruz. Thank you. The gentlewoman from Colorado, 
Ms. Pettersen, is now recognized for 5 minutes.
    Ms. Pettersen. Thank you, Madam Chairwoman, and thank you 
to everybody for being here today. My name is Brittany 
Pettersen. I represent Colorado's 7th congressional District. 
This is Sam. Hopefully, he will be good throughout this 
testimony.
    I really appreciate the conversation on an issue that is so 
important to my State, to all of us across the country. In 
Colorado, we are dealing with unique challenges as we have seen 
climate continue to increase costs for insurance and because of 
the climate disasters that have been coming throughout 
Colorado, increased wildfires and hail. This is Davis. He is 
not being as good as the baby here, buddy.
    Our State is being hit with not just an undersupply of 
housing but also the rising insurance costs. We have seen that 
some people are unable to get insurance at all. Right now, we 
are actually 100,000 homes short of what is needed, and the 
premiums for insurance are nearly up 60 percent. The number one 
driver is from hail damage. So we know we are seeing this 
crisis across the country, and nationally, prices have surged 
nearly 50 percent, and rent is up over 25 percent over the last 
5 years.
    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 country. This would be devastating to Colorado and 
our urban communities, but also especially our rural 
communities. We have also seen an increase in costs because of 
the instability with tariffs and the rising costs there as 
well.
    So, Mr. Lipsetz, as we have seen more extreme climate-
driven natural disasters across the country, and unfortunately, 
the move to eliminate the BRIC program, which invests in pre-
disaster mitigation and strengthens our resiliency. Since I led 
a letter opposing this and demanding an answer and still have 
not received anything from the administration on their move to 
do this, can you please answer, to take a stab at it since we 
have not heard back, and what opportunities the BRIC program 
provided and how important it is?
    Mr. Lipsetz. As I said to your colleague from Michigan just 
a bit ago, the BRIC program is not something I have expertise 
in. It is not a program I know well. I know that most of the 
work we do at the Federal level, we do not have a lot of 
regulatory control over insurance and insurance costs, but that 
the borrowers that we work with are facing much higher 
increases than you just described because it is mostly in the 
multifamily sector facing significant costs from that.
    Our effort at the Federal level has been more for 
resiliency. We have called for better 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. BRIC is, again, 
not a program I know well.
    Ms. Pettersen. Thank you for answering that. I know it is 
important when we look at building resiliency and how we are 
building new types of homes and thinking about things 
differently with climate change. The Trump Administration's 
budget proposal eliminates a 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 have seen an increase in people moving there as 
they are 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?
    Mr. Lipsetz. I would love to. 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 those towns would be an unconscionable 
move for those folks.
    I have to commend the House and the leadership in the House 
now of the mark that you guys put together for the budget of 
restoring some of those programs, so thank you very much. 
Breathe a small sigh of relief. Hopefully, we are not talking 
about zeroing out some of the only production and preservation 
programs that Colorado families and others are depending on.
    Specific to the 502 Direct program, this is an 
extraordinarily effective program where you are taking families 
at 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. It is an important program.
    Ms. De La Cruz. Time has expired.
    Ms. Pettersen. Oh, thank you, Madam Chairwoman, and thank 
you for your comments.
    Ms. De La Cruz. The chair now recognizes the gentleman from 
Iowa. Mr. Nunn is recognized for 5 minutes.
    Mr. Nunn. 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 percent of Iowans spend at least 1/3 
of their overall take-home salary just on being able to afford 
a place to live, and it is 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. My constituents are not asking for 
a handout. Let us be clear. They are asking for a fair chance 
to live where their parents and their grandparents worked, 
where they worshipped, where they started a new life.
    Modernizing USDA's delivery system, expanding loan terms 
from 2 to 5 years, and allowing funding for site development 
activities like surveying and design, these reforms do not 
represent radical ideas, they represent common sense. They help 
us root out fraud, and they advance meaningful reform. We 
recognize this common sense in Iowa, which is why I have worked 
with my friend across the aisle, Ranking Member Cleaver here, 
on delivering bipartisan reforms to USDA's rural housing 
program.
    Mr. Lipsetz, I am going to turn to you. I know you are the 
Democrats' witness, but I think we are looking for 
comprehensive bipartisan solutions here. One of the programs we 
are reviewing is Section 515, 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 are losing them, and we are 
losing them quickly. When you work with many of these 
properties that you are working with today, what challenges do 
you see in recapitalizing them?
    Mr. Lipsetz. Thank you for your question, Congressman. I 
think, as you may have heard throughout this hearing, you would 
be hard-pressed to pick a Democratic or Republican witness out. 
It might have been who invited us, but there has been an 
extraordinary amount of continuity across, in the same way that 
your work with Congressman Cleaver represents the Strategy and 
Investment in the Rural Housing Preservation Act. It lays out 
an authorization for programs that are needed for that 
capitalization. You are authorizing $200 million a year for the 
Multi-Family Housing Preservation and Revitalization (MPR) 
program at USDA, which would do exactly what you just called 
for.
    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 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 20 years. My organization has done that analysis. Two years 
from now, 2027, the rate of decline of the program is going to 
skyrocket. It is crisis time. Like we need action on that, and 
a lot of it shows up in the Strategy and Investment in Rural 
Housing Preservation Act that you have been involved with, and 
I am thrilled to see you pushing that agenda.
    Mr. Nunn. Mr. Lipsetz, thank you, and I think you are 
absolutely right. This is a crisis we can avert if we start 
working on it today. Again, I want to say thank you to the 
bipartisan effort on this.
    Mr. Maute, I will turn to you, the work that you have done 
as well. One of the challenges that I think we have 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 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?
    Mr. Maute. 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 information technology (IT) is, no 
exaggeration, 35 to 40 years behind. Us as borrowers and owners 
cannot simply go on and look at a loan balance. We have to 
contact someone to do that for us. So one, investments in IT, 
investments in staff and training would go a long way to speed 
up the approval processes that we need to develop the housing 
that we build.
    At CARH, we met with both USDA and HUD staff early this 
year and presented memos to them on ways to improve their 
procedures and their work that they do, and we have submitted 
those to the committee for review.
    Mr. Nunn. 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 us have it stronger going forward.
    Thank you, Madam Chair, for the opportunity to join.
    Ms. De La Cruz. The gentlewoman from Oregon is now 
recognized, Ms. Bynum, for 5 minutes.
    Ms. Bynum. 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 
would not 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 Fair Housing Administration 
(FHA) programs would you recommend to better serve rural 
homebuyers and how can we streamline these programs to make 
them more accessible while ensuring they are adequately funded 
and staffed to meet growing demand in underserved rural 
markets?
    Mr. Lipsetz. Congresswoman, thank you for the question. 
Very specifically, 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 is assumed or 
transferred to a new borrower. Clarify for them that homeowners 
with a Section 502 loan can operate in-home childcare 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 Accessory Dwelling Units 
(ADUs) to be eligible also for the 502 Guarantee Program.
    These are all common sense, bipartisan reforms that we just 
talked about, the Strategy and Investment in Rural Housing 
Preservation Act, which your ranking member and 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's single-family housing programs. 
This is often the only loan that is happening for rural 
homeowners to be able to use in some of these towns. Take those 
away, and we are going to significantly reduce the number of 
homeowners in small towns building generational wealth and 
housing their families in a decent manner.
    Ms. Bynum. Thank you. Also, my second question, Mr. 
Lipsetz, is President Trump's proposed budget cuts to the USDA 
by $7 billion and the Department of Housing and Urban 
Development by $33 billion, do you think that this will make 
these programs more effective at helping to lower the cost of 
housing or less?
    Mr. Lipsetz. Thank you for your question. Far less. What we 
do as rural housing folks is we are seeding local economies 
with housing preservation and production that allows the 
private market to grow. These are places where the private 
market is not functioning well and needs a bit of gas in the 
tank through CDFIs, through the programs at USDA and HUD. If 
you can get that dollar to a local community, the members in 
CARH, who sits next to me, can take those and use them as 
private owners to continue to develop. Right now, the level of 
dysfunction in some of these local economies is not allowing 
them to move forward.
    If you take that little--little, by the prospect of the 
whole Federal Government--if you take that little bit of 
subsidy out, you are never going to build a private market to 
function there, and you are certainly not going to house the 
folks who are there today who need it right now.
    Ms. Bynum. So, do you expect rural homebuyers would be 
benefited by cuts to programs designed to address rural housing 
affordability issues?
    Mr. Lipsetz. Certainly not, and I commend the House on 
their mark of having restored many of those programs compared 
to the President's budget. It was a bold move on your part and 
much appreciated from a small-town perspective.
    Ms. Bynum. Thank you. I think, Madam Chair, it is critical 
that we use our responsibility as members sitting on this 
committee to examine the root causes of why fewer and fewer 
people, especially younger Americans and people in rural areas, 
believe that the path to homeownership is becoming 
unattainable. I think everyone on this committee can agree that 
we are going through a housing crisis in this country. When the 
cost of building and buying a home is at record highs, we 
should be bolstering homeownership and homebuilding programs, 
not cutting them. So, let us make owning a home an attainable 
goal for all Americans.
    Thank you, Madam Chair. I yield back.
    Ms. De La Cruz. 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 
17, 2025.

    [The information referred to can be found in the appendix.]

    This hearing is now adjourned.

    [Whereupon, at 3:12 p.m., the subcommittee was adjourned.]

                               APPENDIX

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