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


                      BUILDING A SOLID FOUNDATION:
                    RESTORING TRUST AND TRANSPARENCY
                       IN PUBLIC HOUSING AGENCIES
=======================================================================

                                HEARING

                               BEFORE THE

                       SUBCOMMITTEE ON OVERSIGHT AND 
                                INVESTIGATIONS

                                 OF THE

                    COMMITTEE ON FINANCIAL SERVICES
                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED NINETEENTH CONGRESS

                             SECOND SESSION

                               __________

                           FEBRUARY 10, 2026

                               __________

                           Serial No. 119-57

       Printed for the use of the Committee on Financial Services
       
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]       

                            www.govinfo.gov
                            
                               __________
                               
                    U.S. GOVERNMENT PUBLISHING OFFICE
63-964 PDF                 WASHINGTON : 2026
=======================================================================
                           
                 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 OVERSIGHT AND INVESTIGATIONS

                 DANIEL MEUSER, Pennsylvania, Chairman

TIM MOORE, North Carolina, Vice      AL GREEN, Texas, Ranking Member
    Chairman                         RASHIDA TLAIB, Michigan
ANN WAGNER, Missouri                 NIKEMA WILLIAMS, Georgia
BARRY LOUDERMILK, Georgia            CLEO FIELDS, Louisiana
ANDREW R. GARBARINO, New York        SAM LICCARDO, California
ANDREW OGLES, Tennessee
MIKE HARIDOPOLOS, Florida
                        
                        
                        C  O  N  T  E  N  T  S

                              ----------                              

                       Tuesday, February 10, 2026
                           OPENING STATMENTS

                                                                   Page
Hon. Dan Meuser, Chairman of the Subcommittee on Oversight and 
  Investigations, a U.S. Representative from Pennsylvania........     1
Hon. Al Green, Ranking Member of the Subcommittee on Oversight 
  and Investigations, a U.S. Representative from Texas...........     3

                               WITNESSES

Mr. Bart M. Schwartz, Co-founder & Chairman, Guidepost Solutions.     5
    Prepared Statement...........................................     7
Mr. Chase M. Haller, Deputy Attorney General and Section Chief, 
  Homeowners Protection Unit, Office of the Indiana Attorney 
  General........................................................    14
    Prepared Statement...........................................    16
Mr. Milan M. Ozdinec, President Vargas Premier Corporation 
  Consultants....................................................    45
    Prepared Statement...........................................    47
Mr. Eric Oberdorfer, Director, Policy and Legislative Affairs, 
  National Association of Housing and Redevelopment Officials 
  (NAHRO)........................................................    49
    Prepared Statement...........................................    51

                                APPENDIX

                   MATERIALS SUBMITTED FOR THE RECORD

Mr. Bart M. Schwartz:
    Response to Question from Representative Mike Flood..........    84
    Additional Remarks...........................................    86

                 RESPONSES TO QUESTIONS FOR THE RECORD

Written responses to questions for the record from Representative 
  Maria Salazar
    Mr. Milan M. Ozdinec.........................................    97
    Mr. Eric Oberdorfer..........................................    99

 
                      BUILDING A SOLID FOUNDATION:
                    RESTORING TRUST AND TRANSPARENCY
                       IN PUBLIC HOUSING AGENCIES

                              ----------                              


                       Tuesday, February 10, 2026

             U.S. House of Representatives,
      Subcommittee on Oversight and Investigations,
                           Committee on Financial Services,
                                                    Washington, DC.

    The subcommittee met, pursuant to notice, at 2:06 p.m., in 
room 2128, Rayburn House Office Building, Hon. Dan Meuser 
[chairman of the subcommittee] presiding.
    Present: Representatives Meuser, Wagner, Loudermilk, 
Garbarino, Haridopolos, Hill, Flood, Green, Tlaib, Williams of 
Georgia, Fields, Liccardo, Torres, and Waters.
    Chairman Meuser. The Subcommittee on Oversight and 
Investigations will come to order. Jumped the gavel a little 
bit there. Without objection, the chair is authorized to 
declare a recess of the committee at any time.
    This hearing is titled, ``Building a Solid Foundation, 
Restoring Trust and Transparency in Public Housing Agencies.''
    Without Objection all members will have 5 legislative days 
within which to submit extraneous materials to the chair for 
inclusion in the record.
    As Chairman I now recognize myself for 4 minutes for an 
opening statement.

     OPENING STATEMENT OF HON. DAN MEUSER, CHAIRMAN OF THE 
     SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS, A U.S. 
                REPRESENTATIVE FROM PENNSYLVANIA

    Public housing agencies, PHAs, administer Housing and Urban 
Development's (HUD's). Combined, these programs account for 
roughly $40 billion in Federal funding annually and serve 
approximately 9 million Americans through more than 3,300 
housing authorities nationwide.
    Secretary Bessent recently estimated 10 percent of taxpayer 
funds are lost to fraud, Government Accountability Office (GAO) 
published a report that another 10 percent of government 
payments are improper, and HUD identified 10 percent of PHAs 
fail physical inspections.
    So that could be as high as 25 to 30 percent of the $40 
billion that is misappropriated. This is the scale of taxpayer 
exposure we are discussing today.
    Yet, despite the level of funding, oversight failures, 
corruption, and financial mismanagement we continue to see 
surface across the country. For example, in November 2025, 
Federal prosecutors convicted 70 employees and contractors at 
the New York City Housing Authority for accepting cash bribes 
in exchange for no-bid contracts.
    In Atlanta, in 2023, a senior housing authority executive 
was indicted for falsifying eligibility data to secure 
subsidized housing benefits for her own family members.
    In 2020, tenant fraud investigations in Philadelphia 
uncovered hundreds of ineligible recipients, contributing to 
more than $1.6 million in identified fraud.
    This is just a very short list. These numerous examples--
there is no cherry-picking here--this is widespread.
    So these numerous examples of corruption are just a part of 
the issue. Financial mismanagement is equally prevalent. For 
example, HUD took over the Atlantic City Housing Authority in 
July 2025, after declaring it in substantial default following 
years of financial mismanagement since 2022.
    These failures are not administrative. They are operational 
and they affect daily living conditions and quality of life.
    As stated, approximately 5 percent of PHAs fail HUD 
financial management standards, and as stated, roughly 10 
percent fail physical condition inspections.
    As well, procurement controls inside many PHAs are often 
structurally weak, especially considering that many contracts 
under $10,000 can be issued without competitive bidding.
    In smaller housing authorities, procurement authority is 
often centralized to one individual, and at the property level, 
some authorities fail to reinvest capital funds or leverage 
financial tools.
    The lack of controls on procurement, absence of anti-fraud 
tools in case of corruption makes HUD a prime candidate for 
where we want to stop waste, abuse, and fraud. That is why the 
Trump Administration and this committee have made oversight and 
enforcement of PHAs a priority.
    Earlier this year, HUD announced that it was placing the 
Manhattan Housing Authority in Kansas under Federal monitorship 
because it has systematically failed to achieve HUD's most 
basic requirements.
    While disappointing, we should all be pleased to see HUD is 
taking oversight of PHAs far more seriously.
    As well HUD, under Secretary Scott Turner, is deploying 
enhanced data analytics and AI-enabled tracking systems to 
follow funds from HUD through PHAs and down to subcontractors.
    The Department has created an internal fraud detection 
strike force and increased physical inspections by 25 percent 
in 2025. Yesterday, alongside Chairman Hill and Subcommittee 
Chairman Flood, we sent oversight letters to 32 PHAs designated 
as troubled by HUD, seeking detailed records on financial 
management, procurement, and property conditions.
    We will also review high-performing housing authorities to 
identify management practices that could be replicable and be 
shown as being best practices. We can see how funds are 
controlled and whether residents are receiving the housing 
conditions Federal law requires.
    So this committee intends to ensure those standards are 
enforced in partnership with HUD and Secretary Turner so that 
Federal housing dollars are protected and properly 
administered.
    I yield back.
    I now recognize the ranking member of the subcommittee, Mr. 
Green, for 4 minutes for his opening statement.

   OPENING STATEMENT OF HON. AL GREEN, RANKING MEMBER OF THE 
     SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS, A U.S. 
                   REPRESENTATIVE FROM TEXAS

    Mr. Green. Thank you, Mr. Chairman. I thank the ranking 
member, and of course I thank the witnesses for appearing 
today.
    The title of this hearing is Building a Solid Foundation, 
Restoring Trust, and Transparency in Public Housing Agencies. 
However, I believe that a better title for the hearing would 
include at least five additional words. These five additional 
words are ``lost under the Trump Administration.''
    The title would appropriately now read, ``Building a Solid 
Foundation, Restoring Trust and Transparency in Public Housing 
Agencies Lost Under the Trump Administration.''
    The truth is, if we want to address the oversight of PHAs 
by HUD, we must begin by looking at HUD's Secretary--Secretary 
Turner--and we have to review his actions since he has taken 
office.
    Shortly after the Secretary took office, he began with the 
Department of Government Efficiency and with others in the 
administration, they together decided that they would dismantle 
HUD and undermine the agency's ability to fulfill this mission.
    Secretary Turner shuttered, or significantly scaled back, 
the operations at the HUD Office of Fair Housing and Equal 
Opportunity, as well as several HUD regional and field offices 
across the country.
    This includes at least 780 employees terminated from the 
Office of Fair Housing and Equal Opportunity, and more than 43 
of the HUD--43 percent of the HUD workforce in the field.
    The impact of these measures is already being felt. 
According to ProPublica, HUD spent years building the case 
against a PHA in the Midwest that favored White applicants and 
denied applicants with modest criminal records.
    In April 2025, this PHA offered a six-figure settlement to 
these tenants that they had rejected, only to rescind and 
withdraw the offer 2 days later, citing President Trump's newly 
issued executive order, deprioritizing enforcement of disparate 
impact laws.
    These delays and cuts will continue, and they will continue 
to hinder HUD's ability to oversee the public housing 
authorities we are discussing today.
    Chronic underfunding, lack of compliance, and insufficient 
oversight has resulted in the Trump Administration's severe 
cutbacks in these housing programs, which make the programs 
less safe and less effective.
    We must cease acknowledging the problems while ignoring the 
solutions. The solutions are available to us--proper funding, 
proper oversight, and also proper testing, something the 
Secretary seems to have little knowledge of as a result of 
questioning him at a prior hearing.
    At this time, I yield back the balance of my time.
    Chairman Meuser. The ranking member yields back. We will 
now move to witness testimony. If the chairman of the full 
committee or the ranking member come in, we will yield to them 
for their opening statements, but we will start and welcome the 
testimony of Mr. Bart Schwartz first off.
    Mr. Schwartz is a founder and chairman of Guidepost 
Solutions, where he conducts investigations and provides 
compliance, ethics, and integrity monitoring. In 2019, Mr. 
Schwartz was selected to serve as the Federal monitor of the 
New York City Housing Authority, NYCHA. Throughout his 5-year 
monitorship, Mr. Schwartz and his team oversaw the 
implementation of HUD agreement, aimed at reforming NYCHA, to 
improve residents' living conditions. Mr. Schwartz received his 
bachelor's degree from the University of Pittsburgh--I like 
that--and his juris doctorate from the New York University 
School of Law. So, welcome.
    Also, Mr. Chase Haller: Mr. Haller is deputy attorney 
general and section chief of the homeowner protection unit for 
the attorney general office for the State of Indiana. Prior to 
this role, Mr. Haller worked at the neighborhood Christian 
legal clinic where he focused on housing and consumer justice 
issues. Mr. Haller graduated with a bachelor's degree from 
Indiana University in Bloomington and received his juris 
doctorate from the University of Dayton School of Law. Welcome.
    Mr. Milan Ozdinec: Mr. Ozdinec is the president of Vargas 
Premier Corporate Consultants which specializes in affordable 
housing and government consulting. Mr. Ozdinec has served 
several roles at HUD. Most recently he served as the deputy 
assistant secretary for the Office of Public Housing and 
Voucher Programs, which oversees the Housing Choice Voucher 
Program and serves 2 million low-income Americans. Mr. Ozdinec 
started his career with the Bethlehem Housing Authority where 
he restored 100 distressed rental units under the Section 8 
Program. Mr. Ozdinec received his bachelor's degree from 
Moravian College, and we have with us, Mr. Oberdorfer: Mr. 
Oberdorfer is the director of policy and legislative affairs at 
the National Association of Housing and Redevelopment 
Officials, where he provides member agencies with one-on-one 
technical assistance and policy guidance, among other 
responsibilities.
    Mr. Oberdorfer previously worked in research relating to 
rural, affordable housing, senior housing, and supportive 
housing. He received his bachelor's degree from the University 
of Washington and a master's degree in community and regional 
planning from the University of British Columbia.
    I 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. Schwartz, you are now recognized for 5 minutes for your 
remarks.

STATEMENT OF BART M. SCHWARTZ, CO-FOUNDER & CHAIRMAN, GUIDEPOST 
                           SOLUTIONS

    Mr. Schwartz. Thank you. My name is Bart Schwartz, and I am 
the chairman and co-founder of Guidepost Solutions, a global 
investigations, compliance and consulting company of about 300 
full-time employees.
    I am also an attorney, and I was chief of the criminal 
division of the U.S. Attorney's Office in the Southern District 
of New York.
    As the chair has stated, I was the first monitor of NYCHA 
from 2019 through 2024, and the comments that I have today are 
based on the reports--the public reports--that we submitted 
each year and also the final report that I submitted in 2024.
    The team that I put together pursuant to the agreement that 
NYCHA signed included engineers, architects, attorneys, 
consultants, IT specialists, and administrative staff but in 
addition to that, I added a team of highly skilled former New 
York City detectives. It was that group that--when I turn to 
the corruption aspects of the monitorship--it was that team 
that developed the information that resulted in 70 indictments 
by the U.S. Attorney's Office in the Southern District.
    The investigators visited developments across the city 
every day, taking pictures, talking to residents and employees, 
and writing reports. They developed information through many 
sources and cultivated relationships.
    They documented suspicious circumstances involving NYCHA 
personnel and contractors and developed a record of shoddy work 
and materials that were being used.
    It was the few cases that these prior detectives developed 
that ended up with the 70 indictments later brought by the U.S. 
Attorney's Office.
    As far as I can tell from the public record, those 70 
cases, approximately $15 million of contracts were involved. 
Approximately $2.1 million of bribes were paid, and 
approximately $2.1 million of fines were meted out by the 
court.
    One of the questions that I have to present today is 
wondering what happened to the $11 million, between the $15 
million and the $4.2 million? Because I think it demonstrates 
an ongoing problem at NYCHA, which is that it tends not to 
defend itself.
    I know many of you may think that is not true, but in fact, 
they tend to take the punches and then move on rather than try 
to go after those who have been unfair to NYCHA and have been 
noncompetitive and who have been corrupt.
    So, I think that is one area that I would ask you to 
address but more generally, the problem was that NYCHA had no 
integrity or program at all. There was not even a code of 
conduct. We saw poor management, shoddy work by field 
employees, failure to use technology, a lack of accountability.
    One example would be annual reviews. Almost all of us are 
reviewed annually, but NYCHA refused to have annual reviews of 
employees, reviews which would be used to help the workers do a 
better job, not to punish the workers.
    Despite all of this and the difficulties we had, we had 
some excellent results. As part of the mold action plan, NYCHA 
installed new and performed major repairs on 
approximatelyventilation ducts and fans which reduced mold 
claims by over 50 percent.
    When we first started, NYCHA was cleaning lead from 
apartments at the rate of 400 a year. When we finished, they 
were doing 700 a month. We create--NYCHA had no definition for 
``clean.'' We created definitions with photographs and so 
forth.
    If I may, I would ask that the remainder of my remarks be 
included in the record as I see my time is gone. Thank you.

    [The prepared statement of Mr. Schwartz follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    
    Chairman Meuser. The gentleman's time is expired. Thank you 
for your testimony. We now have Mr. Haller. Mr. Haller, you are 
now recognized for your 5-minute remarks.

   STATEMENT OF CHASE M. HALLER, DEPUTY ATTORNEY GENERAL AND 
   SECTION CHIEF, HOMEOWNERS PROTECTION UNIT, OFFICE OF THE 
                   INDIANNA ATTORNEY GENERAL

    Mr. Haller. Thank you, Chairman and members of the 
subcommittee. My name is Chase Haller, and I serve as the 
deputy attorney general and section chief of the homeowner 
protection unit in the Office of the Indiana Attorney General, 
Todd Rokita, who is a former member of your body.
    I appreciate the opportunity to testify today regarding the 
critical need for enhanced Federal oversight of public housing 
agencies. My home State of Indiana has about 6.5 million 
residents. About 2.1 percent, or 146,000, of them live in 
federally subsidized housing as of 2023.
    Seventy-six percent of them are categorized as extremely 
low-income households, so they represent some of our State's 
most vulnerable residents.
    Our office, with a dedicated team of 5, and an agency of 
400 public servants, has aggressively enforced State housing 
laws over the past 5 years under the leadership of Attorney 
General Rokita, uncovering systemic issues like sham 
nonprofits, abandoned housing projects, and severe habitability 
issues.
    One of our most time-intensive enforcement actions has 
involved Indianapolis Housing Agency, which administers HUD 
funds for low income, elderly, and disabled residents, via 
Section 8 vouchers and other HUD programs.
    Despite our Rental Assistance Demonstration (RAD) 
conversion and substantial capital upgrades years prior, 
residents of Richard G. Lugar Tower, a 17-story, 200-unit 
building, serving elderly and disabled tenants in Indianapolis, 
have faced persistent problems--hot water and elevator outages, 
security lapses, repeated leaks, and trespassers intimidating 
residents.
    After tenants organized and filed 59 complaints with our 
office in early 2023, we conducted an investigation and 
ultimately negotiated an assurance of voluntary compliance with 
Indianapolis Housing Agency (IHA), mandating licensed property 
management, stronger security protocols, and regular 
inspections for a period of 2 years.
    Attorney General Rokita also visited the building in 
December 2023 and spoke with residents about their 
frustrations.
    In April the following year, HUD engaged in a takeover of 
IHA through a cooperative endeavor agreement. Progress at Lugar 
stalled in the summer of 2025 when IHA's funding shortfalls 
triggered a default on our agreement, prompting the departure 
of management and security vendors, and a resurgence of 
disorder.
    We have since renegotiated a new agreement with the owner 
of the building with more detailed reporting standards, 
including a staffing plan, security incident reporting, and a 
resident's council to rebuild trust.
    Our office has also learned that RAD conversions, like at 
Lugar Tower, are unable to use generalized HUD funding for 
maintenance and operations, creating possible disparities 
compared with non-RAD sites, like the nearby John J. Barton 
Tower, where IHA is more capable in its responses to 
maintenance and security needs.
    Recent local reporting also investigated incidents where 
Section 8 tenants were made homeless when ownership transfer 
paperwork went unprocessed. Owners say IHA failed to respond or 
transfer vouchers after acquisitions, cutting off subsidy 
payments and triggering evictions of tenants with valid 
vouchers.
    These breakdowns illustrate how weak oversight can produce 
catastrophic outcomes for families relying on housing 
assistance.
    With new leadership at IHA and with HUD's assistance, we 
are hopeful, for the sake of tenants under its care, that IHA 
can change course.
    Similarly, our office has seen significant inspection and 
habitability failures at other HUD funded projects. In June 
2024, we sued the owner of Bingham Square Apartments in 
Anderson, Indiana, after the owner abandoned tenants.
    After dozens of failed housing-quality standards 
inspections and abatement orders, the owner simply canceled 
their Section 8 contract and began evicting subsidized tenants 
and the property continued to fall into severe disrepair, 
including one building that burned to the ground and was never 
rebuilt.
    In another case we secured a settlement for a voucher 
holder whose apartment was riddled with mold and reportedly 
made her children sick for months. A third-party inspector we 
hired found building-wide mold, even though her unit had passed 
a HUD inspection just weeks prior.
    These are not isolated incidents. They are predictable 
outcomes when oversight fails and accountability is deferred. 
The path forward requires aligning authority with 
accountability.
    If agencies receive Federal dollars to administer life-
sustaining housing assistance, they must also meet verifiable 
standards for fiscal stewardship, livable property conditions, 
and adequate tenant protections.
    Our office asks this committee to consider stronger HUD 
auditing requirements, including annual financial reviews for 
high-risk agencies, consider performance-based funding metrics, 
tying funding allocations to things like voucher utilization 
rates and inspection scoring, and audit of the RAD Conversion 
Program addressing disparities in tenant treatment, unit 
habitability, and ongoing funding viability concerns, finally, 
more robust and verifiable inspection standards to hold 
landlords accountable, ensuring that Federal funds support safe 
housing and not neglect.
    Chairman, Members, all Hoosiers deserve safe, dignified 
housing and the Indiana attorney general's office will continue 
to work toward ensuring that happens in our State. I 
appreciate, again, the opportunity to offer testimony today. 
Thank you.

    [The prepared statement of Mr. Haller follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman Meuser. The gentleman yields. Thank you for your 
compelling testimony as well.
    Mr. Ozdinec, you are now recognized for 5 minutes for your 
remarks.

    STATEMENT OF MILAN M. OZDINEC, PRESIDENT VARGAS PREMIER 
                    CORPORATION CONSULTANTS

    Mr. Ozdinec. Thank you, Mr. Chairman, distinguished 
members. I appreciate the opportunity to testify today. My name 
is Milan Ozdinec, and I am a retired executive who spent my 
entire life in the public housing operations field.
    Thirty-three years at HUD, I served in a number of critical 
roles, most notably as the director of the HOPE VI program and 
ultimately the deputy assistant secretary to implement the 
operating fund for the public housing program, as well as the 
Section 8 appropriation.
    I am here today to talk about hope and good government, and 
the things that a number of our housing authorities over the 
last 30 years have done to bring them into the mainstream of 
both property management and compliance with regulatory 
requirements.
    I agree with Chase, oversight matters. In our business, 
especially because we have a significant regulatory environment 
with which our housing authorities have to comply. So, I agree 
that oversight is a significant part.
    The HOPE VI program, which some of you may be aware of, was 
borne out of something called the National Commission on 
Severely Distressed Public Housing that was published in 1988.
    I would encourage each of you to read that report because 
it was 40 years ago, and we are experiencing some of the same 
problems.
    However, the HOPE VI program, after the first 2 years of 
appropriation of $800 million, became the laboratory for 
turning some of the worst public housing properties around into 
some of the best in our portfolio.
    It was a learned process from the original grant agreement 
to a point where housing authorities were sitting around a 
closing table with high finances and mixed finances, closing a 
real estate transaction that really mattered to communities.
    Unfortunately, the public housing program, including 
capital fund, are not equipped to allow public housing agencies 
to manage their existing inventory of its units.
    The Brooke Amendments, while certainly well intentioned, 
set a situation for housing authorities not able to collect 
more rent and remember the basic principle of property 
management is to be able to collect the rent, with the 
understanding that the Federal Government would make up the 
difference and that is what we have today, which is the 
operating subsidy.
    Today we have over 887,000 units in the portfolio, and the 
question is, from a truly property management perspective, what 
do we intend to do with those 887 units?
    The implementation of HOPE VI set forth a plan that some 
units in the inventory would have to be demolished because of 
their physical condition.
    So let me just say the things that I think the Department 
and the industry have done over the past 30 years to put this 
committee in a better position and this administration in a 
better position.
    I understand Chase's point, and clearly that is happening 
in Indianapolis.
    The first thing that we did was, we established the Real 
Estate Assessment Center. We converted public housing 
accounting to Generally Accepted Accounting Principles (GAAP). 
Receiverships were strengthened.
    It is a persistent problem. Today there are still 25 
percent of the public housing authorities within our portfolio 
that are either troubled or near trouble. So, it is a 
persistent problem. We need to figure out what the answer is.
    Our development program was improved to include mixed 
finance and mixed income, bringing housing authorities into the 
real development world and introducing them to things like tax 
credits, bond financing, and other financing tools.
    We also got more skin in the game from local governments 
and local investors. We demolished and rebuilt some of the 
worst and turned into some of the best, and we can look at 
those.
    Somebody needs to speak for the real estate here. We have 
got 887,000 units. How do we intend to move forward? Hopefully 
I am able to help answer some of those questions.
    Thank you very much for the opportunity to testify, and I 
am here available to answer any questions you might have.

    [The prepared statement of Mr. Ozdinec follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman Meuser. Thank you, Mr. Ozdinec, for your 
testimony. We will now move on to Mr. Oberdorfer. You are now 
recognized for 5 minutes for your remarks.

STATEMENT OF ERIC OBERDORFER, DIRECTOR, POLICY AND LEGISLATIVE 
  AFFAIRS, NATIONAL ASSOCIATION OF HOUSING AND REDEVELOPMENT 
                           OFFICIALS

    Mr. Oberdorfer. Good afternoon, Chairman Meuser and Ranking 
Member Green. Thank you for this opportunity to comment on 
public housing agency, or PHA, oversight and transparency.
    My name is Eric Oberdorfer, and I am the director of policy 
and legislative affairs for the National Association of Housing 
and Redevelopment Officials, or NAHRO.
    NAHRO's over 26,000 members include public housing agencies 
and community development organizations of all sizes, serving 
rural, suburban, and urban areas across the United States.
    This is an incredibly important topic for our members who 
provide millions of homes to families across the country.
    The Federal rental assistance programs that our members 
operate include the Public Housing and Housing Choice Voucher 
Programs. They house families, children, veterans, seniors, and 
disabled individuals.
    These programs are essential to making housing more 
affordable, reducing homelessness and housing instability, and 
increasing resident economic outcomes.
    PHAs are uniquely positioned to serve their local 
communities. Governed by local boards that include community 
leaders and residents, PHAs are locally accountable and 
responsive.
    This helps PHAs stretch limited Federal dollars, respond to 
local housing markets, provide safe, secure housing, and 
partner with landlords and property owners.
    HUD also holds PHAs accountable through two assessment 
tools. HUD uses the public housing assessment system, or PHAS, 
for public housing, and the Section Eight Management Assessment 
Program, or SEMAP, for the Housing Choice Voucher Program.
    Overall, PHAs are responsible stewards of Federal dollars. 
According to recent HUD data, most agencies are high or 
standard performers under PHAS or SEMAP. Data shows that PHAs 
operate these programs with high degrees of accuracy and 
accountability.
    That said, recent reports appear to overstate payment 
errors without proper context. In Fiscal Year 2025, had 
identified approximately $1.5 billion in improper payments out 
of a total $33.9 billion in the tenant-based rental assistance 
program.
    Most of this stems from inactive SAM.gov registrations. In 
these cases, assistance was properly paid to eligible families, 
but the vendor registration needed reactivation. That is an 
easy fix.
    When this technical category is removed, the program's 
improper payment rate drops from 5 percent to just over 1 
percent. While any error should be addressed, an effective rate 
near 1 percent in a nationwide program serving millions of 
households and landlords reflects the strong financial 
stewardship of taxpayer funds by PHAs.
    The other findings in the report of compliance matters that 
HUD's oversight systems and PHA processes are designed to flag 
and correct. They demonstrate successful program monitoring, 
not systemic abuse.
    Federal rental assistance programs also include strict 
eligibility verification rules to ensure that only qualified 
individuals receive assistance and that rental payments are 
timely and accurate. These safeguards have been in place for 
decades and work effectively.
    PHAs are also subject to comprehensive, independent, yearly 
audits that review financial statements, internal controls, and 
compliance with HUD and Federal rules.
    This is the same standard used in the private sector to 
demonstrate responsible financial management.
    This oversight occurs while PHAs are operating against a 
backdrop of chronic underinvestment, and while funding alone 
will not solve the affordable housing crisis, responsible and 
adequate Federal investment is essential to give local 
communities the tools they need to meet the growing demand.
    Decades of underfunding force agencies to manage complex 
responsibilities with limited staff and insufficient resources, 
making the job harder and posing more administrative risks.
    PHAs meet performance standards, pass audits, maintain 
properties, and administer assistance to millions of families 
with a high degree of accuracy and accountability. Time and 
again locally governed agencies demonstrate that they are 
effective stewards of Federal housing resources, doing more 
with less, to serve their communities.
    Although PHAs are succeeding despite chronic 
underinvestment, when looked at the data, PHAs could see even 
more success with full funding, coupled with appropriate 
oversight.
    This would lead to increased training and professional 
development opportunities, including training related to ethics 
and allowing agencies to house more families.
    Last, adequate support for HUD staff is essential for 
maintaining the integrity and transparency of Federal rental 
assistance programs. The partnership between HUD and PHAs is 
critical to our success.
    Thank you, and I look forward to your questions.

    [The prepared statement of Mr. Oberdorfer follows:]
   [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman Meuser. Thank you. We will now turn to member 
questions. As the chair, I now recognize myself for 5 minutes.
    Mr. Haller, the Indianapolis Housing Agency was designated 
by HUD as a troubled PHA and later taken over by HUD. Now can 
you please describe beyond what you stated in your opening 
testimony, some of the conditions at IHA when it was designated 
as troubled?
    Mr. Haller. I believe the--thank you for the question, 
Congressman--I believe the question relates to how IHA 
initially came into the Federal takeover.
    At that time--that was actually in April 2024--so we were a 
year, year and a half into our investigation into the 
circumstances at Lugar Tower Apartments. We were also receiving 
lots of complaints related to other properties maintained by 
IHA.
    We had a distinct focus on Lugar Tower because that is a 
tower that, it is a very prominent place in downtown 
Indianapolis, a very fast-growing area, and residents had been 
complaining. There had been news reports for many months 
related to the conditions there.
    I mean, what we observed when we first went in there was 
pretty disheartening. There were clearly people in the building 
that were not supposed to be there, harassing tenants.
    We actually found that many of the trespassers actually 
were using the stairwells as bathrooms, and so the conditions 
at that property have been, since that time, very disruptive to 
the lives of tenants there.
    Chairman Meuser. Have the conditions improved over the last 
year?
    Mr. Haller. That is a--it is a difficult question to answer 
because it is--there has been some marginal improvement, 
certainly recently when we visited that particular building--
and we have had productive discussions with IHA's new 
leadership and with HUD, who is working with them to turn 
around the agency.
    I think one of the lessons we have learned there is that 
help really should have come many years ago.
    Chairman Meuser. I agree. What are you putting into place 
now to improve that situation, or what is being put into place?
    Mr. Haller. Sure. So right now, we actually have a second 
settlement agreement we have signed with the new owner of the--
with the owner of the property, which has more public 
transparency to it.
    They have to report to us certain security incidents within 
48 hours. They have to give us a monthly written report which 
we can file publicly. We can do 12 unannounced inspections as 
well as regular inspections, so----
    Chairman Meuser. Thank you.
    Mr. Schwartz, NYCHA is a prime example of fraud of PHAs, 
with, as you stated, 70 former officials convicted of 
corruption-related offenses last year.
    Can you describe at a high level, or anyway you would like 
actually, the corruption schemes that occurred at NYCHA and the 
level of sophistication or unsophisticated?
    Mr. Schwartz. Yes, thank you. The 70 cases that were 
brought were really at a rather low level of NYCHA personnel, 
but at a level that was the most--the closest to the residents. 
So the residents were directly hurt by the bribery that 
occurred.
    NYCHA had not done anything to really examine, inspect, and 
have oversight over this problem. They did nothing to see 
whether the work that was being approved really met the quality 
requirements.
    As I said, this is something that really hurt the residents 
in their homes.
    Chairman Meuser. Sure. If you can, with your experience and 
background, maybe provide us--perhaps in writing if you would 
not mind--some best practices that you feel would improve such 
PHAs. I do not have time for the answer now, sir, but if you 
would be so kind to do that.
    Mr. Schwartz. I do have a couple of thoughts--and it is not 
just for PHAs. It is for companies. It is for a lot of 
organizations I work with--and that is to create a culture 
where there is integrity and there is respect for the work that 
you do, and that you are trained to do the work that you are 
supposed to do.
    There is a lack of training. We have had--we made great 
work strides once we brought in private sector people who were 
teaching NYCHA employees how to do their work.
    Chairman Meuser. Thank you very, very much.
    Mr. Ozdinec--my apologies--what reason did HUD stop 
reporting improper payments?
    It was during your time at HUD, we would submit its 
estimate of improper payments annually, and then HUD has ceased 
doing that.
    I am out of time, so I am going to ask you, if you would 
not mind, we can concur with that afterwards or provide it in 
writing.
    I yield back.
    Now Ranking Member Waters is recognized for 5 minutes of 
questioning.
    Ms. Waters. Thank you very much, Mr. Chairman.
    I was just trying to review all of the testimony that I had 
not been able to have a chance to read, et cetera but let me 
just say, I know a lot about public housing. We have public 
housing in the Los Angeles area, big units.
    We have Nickerson Gardens, Jordan Downs, Imperial Courts, 
Gonzaque Village. I know them all. At one time, it was in my 
congressional district, and then I was reapportioned, and they 
were out, and now they are back in.
    Now, I created some programs on my own, and my programs had 
to do with very initial job training, connecting with 
employers, and creating people to go out and find jobs.
    For the people that retrained in my program, we connected 
them, and it has worked. As a matter of fact, in Nickerson 
Gardens, I have 2 young, former gangbangers who we got jobs, 
and they were responsible for helping to lay cable back when 
they were putting cable into public housing.
    They ended up managing, and they just retired with homes, 
children have gone to college, and all of that.
    Now, first of all, we have got to understand, it takes 
resources. It takes money to deal with public housing. You have 
poor people piled on top of poor people, on top of poor people.
    There are a lot of things that you are doing, but this lead 
issue and the mold issue should have been taken care of a long 
time ago. We have been working on it for years and so I do not 
know how much money is being dedicated to it, but it can be 
eradicated if it is actually done.
    Of course, if you have corrupt people who are managing, 
yes, I say get rid of them. Know what you are doing.
    One thing I have learned is, not one public housing program 
that I have come in contact with had a pre-entry program where 
anyone who was qualified and was getting an opportunity to live 
in public housing, the family was brought in and went over with 
them what this public housing is all about, what was expected 
of them, how the trash was supposed to be dumped, what have 
you, how to use the elevators, all of that.
    You just assume that if someone gets public housing 
assistance, you just put them in there and many of them have 
had no experience. They have been going from place to place and 
place to place and all of that. That I am not seeing done.
    The other thing is how to identify leadership inside the 
public housing because people who come in saying, I am your 
role model, and this is what I want you to do, does not work.
    You have to identify leadership that is in public housing 
to help carry out the program.
    Now, I want you to know, I was just in Jordan Downs, one of 
the housing developers in my district that has ended up in a 
way that they are developing, renovating, doing a whole--just 
wonderful things. Guess what? Fifty percent of the work was 
done by Section 3 who live in public housing. How many of you 
really use Section 3?
    I want to tell you, the young people were glad to get those 
jobs. They have stayed on them, and they were being honored for 
the work that they do.
    Section 3 is not being utilized in many of the public 
housing projects where you hire the people who live there, you 
train the people who live there, and they become part of what 
is known as not only the development and the renovation, but 
also people who live there who help even when they are not in 
the 8-hour job all over the public housing developments.
    First of all, you got to have money, and this business 
about we are doing it, but it does not cost anything, I do not 
buy that. It costs money. It costs investment.
    Section 3, we have it in law, and it is not being utilized. 
It has got to be utilized--introduction to what is expected of 
tenants and then ongoing job training programs inside.
    I could talk about this all day. I have done it. I have 
created programs, and the thing about it is, you got to work 
with the people inside the public housing, develop leadership, 
understand leadership, and get them involved.
    Enough said. I could talk about this all day. I yield back.
    Chairman Meuser. The ranking member yields back.
    The gentleman from Arkansas, the chairman of the full 
committee, Chairman Hill, is now recognized for 5 minutes.
    Chairman Hill. Thank you, Mr. Chairman, and I thank the 
ranking member for her knowledge and passion about 
accountability in public housing. We are grateful for her 
decades of passion on this topic.
    I want to reflect on the panel. It is a very good panel. 
Thank you for your testimony about what we are witnessing in 
Little Rock, with Little Rock Public Housing Authority.
    In 2023, in a detailed audit by HUD, housing authority in 
Little Rock, otherwise known as Metropolitan Housing Allowance, 
was put in the troubled PHA category, and among an extensive 
list of deficiencies were, lacked internal control since 2016, 
financial reporting, recordkeeping. None of those impacted--or 
met HUD standards and $30 million is missing, and nobody can 
find where it went.
    After 11 years of complaining to city of Little Rock 
Housing Authority, the HUD local office, the HUD regional 
office in Dallas, finally our attorney general--and that is why 
it is very interesting to have Mr. Haller here--prosecuted, 
criminally, a landlord in the Section 8 program after 10 years, 
and was the first validation of tenant complaints in a decade.
    So let me start with you, Mr. Haller. In Indianapolis, you 
had a RAD program that went awry, is that right, at Lugar 
Tower?
    Mr. Haller. My understanding with Lugar Tower, Congressman, 
is that, yes, it went through a RAD conversion and is now owned 
almost fully by a private investor.
    Chairman Hill. Was that contract a bad contract that then 
said it was inadequately--like an inadequate cash reserve fund, 
an inadequate rental collection process, an inadequate safety 
program, an inadequate tenant whistleblower assistance program?
    Because we just modernized Lugar Tower, right, and we took 
money to do that on a long-term RAD demonstration program, and 
yet it sounds like it failed. Is that fair based on what your 
investigation showed?
    Mr. Haller. I think what we have observed with Lugar Tower 
in Indianapolis, I think that is a fair assessment, that in 
that particular case, that program has actually significantly 
hurt the tenants who live there. They would tell you that if 
they were here today.
    Chairman Hill. What is the biggest weakness there, the 
contractual right between the RAD owner-developer? Are the 
people too optimistic about the management expenses and the 
rents collected?
    Tell me why, once you make that kind of major capital 
expenditure, you have all the problems you outlined, which were 
not just ``ran out of cash'' problems. It sounds like the whole 
thing was a fiasco.
    Mr. Haller. Yes, Congressman, I mean, to your question, our 
understanding is that after the RAD conversion, the project 
itself has not sustained enough cash-flow from collecting rents 
in order to sustain the--or to fund the ongoing operation and 
maintenance of the building, which begs the question how did 
that come to happen, right?
    Chairman Hill. Well, let me stop you there and say, who is 
responsible for that? The Indianapolis Housing Authority, the 
Office of HUD in Indianapolis, the regional office? Who says 
that was good to go contractually to do that program, and does 
anybody bear any responsibility besides--who?
    Mr. Haller. That I cannot really speak to that specific RAD 
conversion. It was many years ago. I know one of the difficult 
parts is assigning accountability when you have had potentially 
years of poor performance, right?
    Chairman Hill. Let me stop you there.
    Mr. Ozdinec, since you were a former long-time HUD leader 
in public housing, as a Deputy Assistant Secretary (DAS) there. 
Who is to be held accountable for that?
    Mr. Ozdinec. Thank you for the question, Congressman. We 
have got 2,300 public housing authorities. We are going to have 
Indianapolises unfortunately. I think the remedy for these 
types of abhorrent situations, like Indianapolis, is oversight.
    Chairman Hill. Okay. Let me stop you there. This is my 
whole complaint. Regardless of whether HUD is adequately funded 
or inadequately funded, there is no oversight. No one takes any 
responsibility. That is what I have seen in Little Rock--zero 
responsibility--zero responsibility at the HUD's local office, 
the city board.
    They have complained mightily, and they appoint the 
directors to the public housing authority, and I think the 
victims here are the tenants in public housing and the 
taxpayers, and there is no restitution.
    I yield back. Mr. Chairman, I commend you for this hearing.
    Chairman Meuser. The chairman of the committee yields back.
    The gentlewoman from Georgia, Ms. Williams, is now 
recognized for 5 minutes.
    Ms. Williams of Georgia. Thank you, Ranking Member Meuser--
well, thank you, Chairman Meuser and Ranking Member Green--I am 
giving you an upgrade over here, Mr. Green--and thank you to 
our witnesses for joining us today.
    In 2023, the HUD Office of the Inspector General conducted 
an investigation into HUD's oversight of the physical 
conditions at public housing authority complexes.
    Disturbingly, the Office of Inspector General (OIG) found 
that HUD-filled offices were inconsistent in overseeing whether 
public housing authorities corrected life-threatening 
deficiencies identified during inspections, and that HUD did 
not even track PHAs' corrections of non-life-threatening safety 
deficiencies.
    This is problematic. I am deeply concerned about these 
findings, especially given that the Trump Administration has 
significantly slashed HUD staffing this year alone.
    At the beginning of the year, or last year, Elon Musk 
proposed a 50 percent reduction in staff who administer public 
housing vouchers and oversight. If HUD already lacked the 
capacity to provide adequate oversight of public housing 
authorities in 2023, how can HUD possibly be doing more now 
with even less?
    Mr. Oberdorfer, can you please describe any trends that you 
have observed in HUD oversight since this 2023 report, and have 
there been any changes in the rate, frequency, or findings of 
HUD inspections of public housing authorities?
    Mr. Oberdorfer. Yes, thank you for that question, 
Congresswoman. As you mentioned, staffing is a huge component 
of this for HUD, especially as agencies have their inspections 
completed and that information gets to the Department.
    There needs to be quick turnaround between the Agency and 
Housing and Urban Development, especially if there are issues 
related to the life and safety of a resident.
    Two thousand twenty-three is an interesting year for public 
housing inspections because that is the year a new protocol 
went into place. This is the NSPIRE, or National Standards for 
the Physical Inspection of Real Estate.
    This was an effort that HUD had been working on for some 
time to try to make inspections less subjective and more 
objective, to identify real risks and issues, and specifically, 
risks and issues that would occur in units.
    So what we are seeing right now in terms of trends with 
inspections is, there are a lot more inspection findings that 
are rated at a 59, which essentially means failing, but failing 
because of the unit.
    Now, I think you can look at those two ways. One, the most 
important is that obviously we need to make sure those units 
get updated and fixed so that they are safe for the residents.
    Two, it also means this new inspection protocol is doing, I 
think, good work in terms of oversight for the quality of the 
units and the safety of the residents, because in other cases 
that unit and that property may have passed.
    Now with these shifts in how HUD is actually looking at 
their calculations for inspection scores, these would trigger 
that failure, which would mean the agency would need to act 
right away to fix those concerns.
    Ms. Williams of Georgia. Thank you.
    Mr. Oberdorfer, during the Financial Services Committee's 
oversight hearing with Secretary Turner just last week, I took 
the opportunity to press the Secretary about some of the dire 
living conditions that some of my constituents in Atlanta are 
facing in public housing.
    One particular egregious story unfolded at Forest Cove. It 
is an apartment complex in Atlanta, and it made headlines in 
2022 because residents were forced to live in some of these 
unsafe conditions.
    They faced holes in their walls and floors, unrepaired fire 
damage, pests, rats, rodents, before the apartments were 
ultimately condemned and eventually torn down.
    After the building was condemned, HUD issued an official 
debarment order to Millennia's CEO and Millennia Housing, 
prohibited them from participating in any new business with 
HUD, its Office of Multifamily Housing Programs, and with any 
Federal Government Agency or Federal programs for 5 years.
    However, it does not affect Millennia's existing properties 
or contracts with HUD or the ability of Millennia to contract 
with HUD after the 5-year prohibition expires.
    Mr. Ozdinec, can you please describe the role of HUD in 
disbarring bad actors in the field, and describe the role of 
disbarment in restoring residents' trust in HUD and their local 
public housing authority?
    Mr. Ozdinec. Thank you very much for that question. I am 
not familiar with the incident that you--and the debarment that 
you mentioned in your example. What I can say is that HUD 
serves as a partner and does oversight to the extent that it 
has resources to do so.
    The other opportunities that are available to the 
Department is the Office of the Inspector General. That is--it 
is their calling to ferret out fraud and follow it through to 
the logical conclusion.
    Now, I do not know--and, again, in your example--where the 
responsibility lies there, but clearly the Department took 
steps and debarred the vendor that you mentioned.
    Ms. Williams of Georgia. Thank you. I am grateful for this 
conversation today because our people back home, and every 
district across the country, deserve safe, desirable living 
conditions.
    Chairman Meuser. Great. The gentlewoman yields back.
    The gentlewoman from Missouri, Mrs. Wagner, the chair of 
the Subcommittee on Capital Markets, is now recognized for 5 
minutes.
    Mrs. Wagner. I thank you, Mr. Chairman, and thank our 
witnesses.
    For decades, mismanagement, fraud, waste, and abuse at 
public housing agencies have deprived residents of access to 
safe, stable housing while also, frankly, squandering enormous 
sums of taxpayer dollars.
    For example, near my district, mismanagement at the East 
St. Louis Housing Authority was so severe, it resulted in the 
Department of Housing and Urban Development, HUD, taking 
control of the agency for over 30 years.
    At its core, the problem at the St. Louis Housing 
Authority, were a product of mismanagement and, most 
importantly, fraud.
    Mr. Schwartz, similar issues occurred at the New York City 
Housing Agency. Based on your work, what systems within public 
housing agencies are most susceptible to waste, fraud, or 
abuse?
    Mr. Schwartz. Well, I think in public housing, as well as 
in other institutions, it is the lack of oversight, the lack of 
auditing, the lack of independence, the lack of inspectors, and 
the failure to go after people who try to defraud the 
authority.
    Mrs. Wagner. I have several follow ups to this, so--and 
your points are very well taken--how can these agencies 
mitigate fraud risks in their procurement systems, for 
instance?
    Mr. Schwartz. Well, procurement is a good starting point 
because they can have the analytics--or they should have the 
analytics to figure out who is doing the work, who is doing it 
well, how many contracts are they getting, and look for the 
suspicious aspects of these associations.
    Mrs. Wagner. How can these agencies mitigate the risks that 
their employees are even accepting bribes that we have seen?
    Mr. Schwartz. Well, and again, I think analytics is part of 
this, but as I said, I went back to some of my old ways of 
doing things as a prosecutor. I--we hit the pavement and we 
asked the people what was going on. We listened to the 
residents. The residents know what is going on. They can tell 
you what the problems are.
    Mrs. Wagner. That is very interesting. I mean, we have seen 
employees falsifying eligibility information, work orders, on 
and on.
    So you think that the root of this is oversight by 
leadership but also in talking with residents?
    Mr. Schwartz. Yes, leadership is primarily responsible 
because it does not create the culture of honesty and 
integrity.
    All organizations have to deal with this. The housing 
authorities are not different, but I do not think that HUD 
requires a code of conduct. We could not find a code of 
conduct.
    Mrs. Wagner. They do not require a code of conduct----
    Mr. Schwartz. We could not find one at NYCHA.
    Mrs. Wagner [continuing]. for their employees?
    Mr. Schwartz. We could not find one at NYCHA.
    Mrs. Wagner. All right. Well, during your monitorship, you 
found a culture of, I think you said, defeatism and failure at 
the New York City Housing Agency.
    How did this culture impact residents?
    Mr. Schwartz. Excuse me?
    Mrs. Wagner. How did it impact residents?
    Mr. Schwartz. Oh, it was--as I said before, it is really at 
the level of the residents where all the damage was being done, 
where the work that was--the shoddy work was used.
    You cannot be naive about this. When somebody pays a bribe, 
the bribe does not come out of their pocket. When it comes time 
to do the work, they do not bring in union labor. They do not 
bring in labor that has skills. They do not bring in the 
materials they are supposed to bring in. They make up for the 
bribe, and who suffers? The resident.
    Mrs. Wagner. While housing agencies are responsible for 
ensuring that these residents have access to the safe, clean, 
housing, HUD is responsible for holding these agencies 
accountable to taxpayers and residents alike.
    Unfortunately HUD, it looks like, has historically 
struggled to identify issues at struggling or failing public 
housing agencies before they become so, so severe.
    Mr. Ozdinec, how does HUD ensure the public housing 
agencies are effectively stewarding taxpayer funds?
    Mr. Ozdinec. Thank you for that question, Madam. So the 
Department, I do believe somewhere about 2000, implemented the 
Real Estate Assessment Center, which collects data from housing 
authorities, both financial and physical data as mentioned by 
Eric, and then analyzes that data and produces scores.
    Mrs. Wagner. My time is expired. If there is anything you 
have to add to that, if you could do so in writing. I 
appreciate this hearing, and I appreciate all the work that we 
need to do collectively. We have heard a lot of good ideas 
about oversight, et cetera.
    I thank you, Mr. Chairman. I yield back.
    Chairman Meuser. The gentlelady yields. The gentleman from 
California, Mr. Liccardo, is now recognized for 5 minutes.
    Mr. Liccardo. Thank you. Thank you all for your testimony 
today.
    Mr. Ozdinec, I was interested in particular in your written 
testimony in which you acknowledge that the Brooke Amendment, 
which provides for basic rent protections for tenants, has 
never been adequately funded by the Federal Government.
    Do you have a sense about what that gap is that would be 
required for us to live up to our commitments to those who live 
in public housing?
    Mr. Ozdinec. Thank you for that question. I think that has 
always been a debate. We fund the operating fund at 92 percent, 
or call it the percentage proration, whatever you will. It is 
never a hundred percent of what the experts believe is needed 
to administer our programs.
    There is always--there is a gap of 8 percent, 5 percent. 
You can put a number on it if you would like.
    It is going to be different everywhere. Each housing 
authority is run differently. That is part of the problem with 
our system as well, is that we have a wide variety of housing 
authorities in the portfolio who serve a wide variety of 
families now, after the last 30 years where we are doing mixed 
finance, mixed income housing----
    Mr. Liccardo. Right.
    Mr. Ozdinec [continuing]. which I can go on and talk about 
forever----
    Mr. Liccardo. I will get there in a moment.
    Mr. Ozdinec. Okay.
    Mr. Liccardo. Yes.
    Mr. Ozdinec [continuing]. as a new way of doing public 
housing.
    Mr. Liccardo. This capital replacement and maintenance 
challenge is a monster, and I know it has been that way for 
many years.
    You also acknowledged that there is essentially an 
inability to establish and fund reserves for operations and 
replacement. Is that because of a statutory or regulatory 
barrier, or is that a funding issue?
    Mr. Ozdinec. It is statutory.
    Mr. Liccardo. Okay. So literally PHAs who are trying to 
properly manage their assets cannot establish seeking funds, 
standard funds that any housing manager would have in the 
private sector?
    Mr. Ozdinec. Yes, sir.
    Mr. Liccardo. So clearly that is one barrier that we could 
eliminate if we wanted public housing to operate well?
    Mr. Ozdinec. It is.
    Mr. Liccardo. Then I am interested in your proposed 
solution, and clearly you have had a lot of experience through 
the HOPE VI program, which, as you indicate, leveraged Federal 
funds with more than $5 billion in private equity.
    Can you help me understand, for those of us who are 
particularly concerned about those families who are living in 
units where there are rent restrictions, what exactly does this 
do for those restrictions and those families?
    Are we seeing, in these conversions, are families literally 
pushed out in the street, or is there some accommodation made?
    Mr. Ozdinec. That was one of the original controversies 
about the HOPE VI program, would be displacement. We are 
displacing poor families from what were at the time terrible 
properties, terrible places to live, terrible neighborhoods by 
any standard. Again, the National Commission on Severely 
Distressed Housing was quite clear in 1988 what the problem 
was, and it was obvious.
    The methods used to do redevelopments, community building, 
community participation, bring good government, and good 
government breeds better government. Things that are going on 
in Indianapolis could have been avoided. I do not know but 
setting a standard for good government locally is really 
critically important.
    Mr. Liccardo. As we think about the conversion of some of 
these projects to mixed income, help me understand better. Is 
there a net new addition of units? Are we literally taking the 
same exact structure, remodeling it, and some folks who had 
rent restrictions no longer have them?
    Mr. Ozdinec. Excellent question. Thank you, Congressman.
    As the public housing inventory drops--we are now at 
887,000 units--the Section 8 program goes up in terms of member 
families being served.
    When I served with the department--I retired in 2018--the 
appropriation for the Section 8 program was somewhere around 28 
billion----
    Mr. Liccardo. Could I interrupt you for a moment? Does this 
imply, then, essentially that we need a greater commitment to 
housing choice vouchers if we are going to make this work?
    Mr. Ozdinec. Far be it from me to say that. It clearly is a 
wonderful tool to redevelop neighborhoods and to give families 
the opportunity to move out of distressed neighborhoods into 
communities that will--and I am not sure if you have read the 
Chetty--Raj Chetty----
    Mr. Liccardo. Raj Chetty, yes. I am familiar.
    Mr. Ozdinec. It is unbelievable. I spent 35 years with the 
HOPE VI program doing it and hoping that whatever we did was 
going to serve these communities well, and it did, and it 
especially served children.
    Mr. Liccardo. Yes.
    Mr. Ozdinec. To me, it was a capstone of my career. I know 
that things that we did as a government had an impact.
    Mr. Liccardo. I appreciate that sir, and I do appreciate 
Mr. Shetty's research, and it is very valuable. I think what 
this is telling us is we need more financial commitment, fiscal 
commitment to the housing choice voucher program to make these 
opportunities available. Thank you.
    Mr. Ozdinec. Thank you.
    Chairman Meuser. The gentleman yields.
    The gentleman from Georgia, Mr. Loudermilk, is now 
recognized for 5 minutes.
    Mr. Loudermilk. Thank you, Mr. Chairman, and thank you all 
for being here at this hearing.
    Earlier today, we had a hearing on housing but in the 
private sector and part of that conversation was the compliance 
costs the private industry has with complying to regulations.
    We see that across the financial services sector, even in 
small banks where you have to move personnel away from doing a 
productive job to do compliance. I am sure that we see the same 
thing in public housing, especially to the extent that there is 
a long list of regulations and reporting requirements that PHAs 
must follow.
    As you have heard from Mr. Schwartz, it is unclear whether 
the current reporting requirements are sufficient for HUD to 
identify waste, fraud, and abuse without further investigation.
    Mr. Ozdinec--did I get that right?
    Mr. Ozdinec. Yes, you did.
    Mr. Loudermilk. Okay. Thank you. What impact do the current 
reporting requirements have on public housing agencies?
    Mr. Ozdinec. In my view?
    Mr. Loudermilk. Yes.
    Mr. Ozdinec. Significant impact.
    Mr. Loudermilk. Okay.
    Mr. Ozdinec. They spend significant time complying with the 
regulations and this is coming from a former regulator. 
Complying with the regulations that the department puts out. I 
think this is every--every administration has a regulatory 
agenda, so it would be important to look at the Trump 
Administration's regulatory agenda here and see how it can help 
some of the things that Mr. Haller has talked about.
    At the end of the day, will it help the financial burdens 
that housing authorities suffer from complying with? There 
are--the rules are enormous. For any of you that are 
interested, the national dashboard for the Section 8 program is 
available to the public, so you could see how your housing 
authority is doing related to the various component parts of 
the Section 8 program.
    Mr. Loudermilk. Are these regulations modernized over time? 
I mean, we are looking at issues even with the Bank Secrecy Act 
where you got currency transaction reports of $10,000 which was 
established in 1972, which really would equate to $87,000 a 
day. We were really slow in modernizing our regulation from 
here, but you are saying that the housing regulations kept pace 
with technology and on pace with the current economy?
    Mr. Ozdinec. No.
    Mr. Loudermilk. They are not.
    Mr. Ozdinec. Unfortunately, I--It breaks my heart to say 
it. We have underfunded public housing authorities and told 
them to keep up and they do. We have got a 70 billion dollar--
arguably 70-billion dollar backlog of physical need.
    We spend a lot of administrative money taking care of the 
compliance issues, rightly so but there is a cost to the 
system.
    Mr. Loudermilk. Can we benefit from modernizing the 
regulations or tailoring the regulations?
    Mr. Ozdinec. I believe so. I will be interested to see what 
this administration is proposing in their regulatory agenda. I 
think that they would like to do some work on SEMAP, which is 
the assessment tool for Section 8, and PHAS, which is the 
assessment tool for public housing.
    The other thing that is a tool to the department is Section 
6J of the act. Receivership is the death penalty for housing 
authorities and should not be taken lightly because it has 
cost--in addition to the cost of running an agency, it has 
costs associated with the receivership as well.
    Mr. Loudermilk. All right. Thank you.
    Mr. Schwartz, talking about modernization and technologies, 
how could the technologies and data management systems you used 
in the New York City Housing Agency help streamline compliance 
for public housing across the country?
    Mr. Schwartz. Yes. Thank you for that question.
    It made a big difference in working with the employees of 
NYCHA. We took the best of the engineers who did the work in 
the private sector and then they showed the NYCHA employees how 
they had all the data they needed to understand the problems, 
but they never understood how to use the data.
    So the elevators improved; heating improved; training 
improved. Training is key to this, to all of these things.
    If I might add just to the prior question, there are two 
kinds of compliance, really. There is regulatory and there is 
integrity. Integrity does not require a lot of money. You just 
have to live it and prove it and remind people. Regulatory is 
more expensive.
    Mr. Loudermilk. Thank you for that. You make a good point 
because just in my own home State of Georgia, late last year a 
senior executive at Atlanta Housing Authority was arrested for 
steering Section 8 housing funds to herself and her family. 
That is not only illegal but yet it takes money and resources 
out of the hands of the people they are trying to protect.
    Mr. Chairman, I yield back.
    Chairman Meuser. The gentleman yields.
    The gentlewoman from Michigan, Ms. Tlaib, is now recognized 
for 5 minutes.
    Ms. Tlaib. Thank you, Mr. Chair.
    Last year news broke that HUD was drafting a rule to impose 
time limits and work requirements on those who receive Federal 
housing assistance. I find this to be shockingly cruel. For a 
single mother working 40 hours a week and earning minimum wage, 
a voucher is the only thing standing between her children's 
two-bedroom apartment and homelessness.
    In every State but one, she cannot afford rent with a full-
time job. Currently more than 40 percent of housing choice 
voucher holders right now already fail to find a landlord that 
meets their needs and will accept their voucher.
    So Mr. Oberdorfer, will not the imposition of time limits 
make it harder for voucher holders to secure housing since many 
private landlords would likely prefer a tenant who will not 
have to be replaced in the near future?
    Mr. Oberdorfer. Yes. Thank you for that question.
    There are agencies that have implemented work requirements 
and time limits, but it is always very dependent upon the local 
economy, local conditions. One of the biggest benefits of the 
housing choice voucher program is the stability that landlords 
have with the program, right? There is----
    Ms. Tlaib. Do you think a landlord is going to leave the 
program because of this--I mean, we call it time limit but let 
us be honest. They are just going to let the stuff expire and 
then they have no way of getting paid.
    Mr. Oberdorfer. Yes. The lack of consistency would make it 
less desirable to be a landlord for the program.
    Ms. Tlaib. Also, will not the higher turnover vacancies 
make it harder for affordable housing developers to make 
projects pencil--pencil out, thereby deincentivizing investment 
in affordable housing that we desperately need right now in our 
country?
    Mr. Oberdorfer. Yes. Again, when doing redevelopment for 
these affordable housing projects, that stable income coming 
from rent is critical and making sure that it is the right 
amount of stable is especially important to that.
    Ms. Tlaib. And you know this. The majority of PHAs, I think 
the 19 PHAs right now--19 out of more than 3,000 that have 
tried to impose time limits later abandon these policies. Is 
that correct?
    Mr. Oberdorfer. That is correct. One thing I would just add 
too is for the agencies that have done this, having additional 
funding for self-sufficiency programs to help families maintain 
childcare or get additional education, all of those----
    Ms. Tlaib. They should check out my Economic Dignity for 
All package.
    Mr. Oberdorfer. Yes. Very important, yes.
    Ms. Tlaib. Mr. Oberdorfer, do you have any reason to 
believe that these barriers have disappeared?
    Mr. Oberdorfer. No, I do not.
    Ms. Tlaib. Have your members expressed concerns with the 
proposed changes to you directly?
    Mr. Oberdorfer. What our members have expressed is that 
there needs to be PHA discretion to decide whether or not these 
changes would work for them. Again, we are seeing costs for 
rents continue to go up. We are not necessarily seeing costs of 
income for folks go up. So it does make a little bit of a 
challenge.
    Ms. Tlaib. You know 81 percent of nondisabled HUD 
participants without young children were--81 percent were 
employed in the past year. Those who not working are typically 
attending school, providing care, or having a disability. Do 
you think, given that the vast majority of working age HUD 
participants are already employed, what kind of administrative 
burden will this impose on PHAs and owners right now?
    Mr. Oberdorfer. That is a great question. There would be 
significant administrative burden for that mainly, again, from 
the compliance piece because you would need to check with all 
families to make sure whether or not they would fall under the 
requirements for the potential rule if they were provided a 
safeguard provision; all sorts of things that would need to be 
checked annually when doing all of the additional eligibility 
verification that agencies have to do. I think that goes back 
to the complexities of the regulatory compliance for these 
programs.
    Again, I think it is critical that we are ensuring 
residents are safe and that agencies are being responsible 
stewards of taxpayer dollars, but we need to think about how we 
can streamline these programs in a way so that additional 
staffing can be used for actually serving the community as 
opposed to----
    Ms. Tlaib. It is common sense to me. I mean, it is very 
clear this is not going to work.
    When a handful of States imposed work requirements in 
Medicaid programs, Eric, thousands of people were erroneously 
kicked off the program because of paperwork issues and red tape 
despite the fact that they were actually working. Should we be 
worried about people accidentally losing their housing 
assistance despite meeting program requirements?
    Mr. Oberdorfer. If there is a rule that moves into the 
final rule position, I would say yes. There needs to be 
safeguards put into place to make sure that does not happen and 
there needs to be the proper implementation timeline to ensure 
that those families are not--there are not families impacted 
that should not be.
    Ms. Tlaib. Is this statement true, that this is not 
evident-based policymaking?
    Mr. Oberdorfer. I would say when looking at the population 
that most of these programs serve, it is a small number of 
individuals that would fall under these requirements, so----
    Ms. Tlaib. I am frustrated for your members, just so you 
know. I feel like we are constantly trying this stuff over and 
over again even though we have actual evidence that shows it 
does not work.
    Mr. Oberdorfer. Yes. I know you mentioned this as well, but 
some of the information that has come from the Moving to Work 
agencies that have tried this, it is a really interesting read 
to see what it looks like when implemented on the ground.
    Ms. Tlaib. Thank you. I yield.
    Chairman Meuser. The gentlelady yields. The gentleman from 
Florida, Mr. Haridopolos, is now recognized for 5 minutes.
    Mr. Haridopolos. Thank you, Mr. Chairman. Again, happy 
birthday to you, my friend. Great to see you.
    I am going to keep--wide open question. You guys have 
answered very detailed questions but as a new member of the 
committee, what I want to get a general feel--I am going to ask 
Mr. Schwartz and Mr. Ozdinec about this as well if you do not 
mind.
    Mr. Schwartz, you have been involved in this for over 30 
years, and obviously you have an opinion about the direction in 
which HUD is going, and where you have seen the good, the bad, 
and the ugly, I would imagine, in those 30 years.
    If you gave a piece of advice to the committee given on 
your vast experience--and I really like your focus on ethics 
that you discussed--what is the best thing that we could do on 
this committee to either empower Congress or those folks in the 
field who are trying to help out people with affordable 
housing?
    What is the best thing we could be doing right now in 
Congress to change the dynamic for the better?
    Mr. Schwartz. Thank you for that question.
    My experience with NYCHA--public housing is not 30 years. 
It is really since I got involved with NYCHA, but it felt like 
30 years.
    It goes back to something I said before, drawing a 
difference between regulatory compliance and integrity 
compliance. The reason I go to that is because integrity 
compliance is not expensive. It is not--you do not have to 
throw money at integrity compliance. You have to be--you have 
to be a model. You have to talk about it. You have to create 
pride in the organization so that people want to do the work 
that they have.
    I would say that HUD should have a code of conduct at every 
housing authority, whatever size that housing authority is. 
They should have programs that have to be followed so people 
understand what it means to be honest and they should punish 
when people are not being honest. You have to create that 
culture.
    I do not know whether that is for--for frankly--for 
Congress--but certainly is for HUD, that HUD should take 
responsibility for that. When you do not pay attention to it, 
you are really sending the message that you do not care.
    Mr. Haridopolos. Thank you. If I could do the same for Mr. 
Ozdinec, if you do not mind giving me your perspective, I would 
appreciate it.
    Mr. Ozdinec. Thank you very much.
    You know, there are going to be bad actors everywhere. You 
cannot legislate for stupidity or crime, and I feel badly about 
what the member just said about what was going on in Atlanta. 
To take that position you have to know--forget the code of 
conduct. You cannot take money, given the fact that you are in 
a position of authority and you are directing families to 
specific neighborhoods, I mean, the obviousness of that wrong 
you cannot legislate for.
    So we can try to produce some regulations to prevent that 
from happening, or we can provide enforcement and oversight. I 
mean, I think those are your two choices to deal with that type 
of situation.
    For every person like this example in Atlanta, there are 20 
totally dedicated people in the industry who want to do the 
right thing, and it is complicated. It is hard work. I think 
Eric will attest to what his members deal with consistently, 
but you cannot legislate or regulate for crime. There needs to 
be some way to deal with that component part. When you get a 
bad actor, recognize it and do something----
    Mr. Haridopolos. I mean, I am asking--you have been there 
for a while. I mean, you say there needs to be some way, so 
what is the way? You have been there for a while. What do you 
think is the way?
    Mr. Ozdinec. I do not know the answer to that. I do not 
know the answer to bad actors. I know that in my career I dealt 
mostly with really good actors wanting to make a difference in 
their community. While they did not take a vow of poverty, they 
did not go out and use their position to engrandize themselves 
financially.
    Mr. Haridopolos. Mr. Haller, do you have an opinion on this 
subject?
    Mr. Haller. I think what I can offer, Congressman, is that 
the lack of accountability we have seen, not even just with 
PHAs but other, like, project-based rental assistance 
properties and things like that is--in the example I gave was 
the Bingham Square case that we filed, I mean, you are 
accepting taxpayer money for rent for these folks; and yet, 
they walk away from the project, completely abandon the 
property.
    Buildings are burning down. The tenants are left to their 
own devices. What was the result? They filed bankruptcy. There 
was no real accountability for the individuals in that case. I 
liked the example that--I think it was Congressman Hill gave of 
an actual criminal prosecution. When that is appropriate, I 
think that is the only way you can make sure that folks----
    Mr. Haridopolos. I yield back, Mr. Chairman. Thanks for the 
time.
    Chairman Meuser. The gentleman yields back.
    The gentleman from New York, Mr. Torres, is now recognized 
for 5 minutes.
    Mr. Torres. Thank you, Mr. Chair.
    Mr. Schwartz, in your testimony you rightly describe NYCHA 
as an irreplaceable asset for the city of New York. I worry you 
were invited to testify not to underscore the irreplaceable 
value of public housing but to discredit and de-legitimatize 
public housing so that it is no longer seen as the 
irreplaceable asset that it is and I worry that there are 
cynical critics of public housing who could easily seize upon 
your words to present a profoundly distorted and 
decontextualized view of NYCHA.
    My first question: Do you think the Federal Government has 
historically treated NYCHA as the irreplaceable asset that it 
is?
    Mr. Schwartz. I do not know if that is a question for me, 
really, to----
    Mr. Torres. You have no opinion on the funding levels of--
--
    Mr. Schwartz. I have an----
    Mr. Torres. Let me make it more concrete. The latest 
appropriations bill passed by Congress cuts funding for NYCHA 
by 14 percent, which translates into the loss of $100-million. 
Do you think a 14 percent, 100 million dollar loss is an 
example of the Federal Government treating public housing as an 
irreplaceable asset?
    Mr. Schwartz. I do not think that is a fair question for 
me, and I--but----
    Mr. Torres. You were the monitor for public housing for 5 
years.
    Mr. Schwartz. And I----
    Mr. Torres. Funding is clearly relevant to the operation of 
public housing.
    Mr. Schwartz. I wanted to be the monitor because I think 
NYCHA and public housing authorities are so important.
    Mr. Torres. Your secretary, Scott Turner, denies that NYCHA 
has a funding crisis despite knowing nothing about public 
housing. Do you acknowledge that NYCHA has a funding crisis?
    Mr. Schwartz. Yes, I think there is a funding crisis. The 
question is why is there a funding crisis.
    There are many aspects to it----
    Mr. Torres. Which level of government is the primary 
funding source for public housing?
    Mr. Schwartz. Well, I think the initial level is the public 
authorities themselves and----
    Mr. Torres. It is the overwhelming source of funding for 
public housing.
    How much capital funding does NYCHA receive annually?
    Mr. Schwartz. I forget now. I forgot the number. It is a 
huge number.
    Mr. Torres. 700 to $800 million. Do you acknowledge that 
NYCHA has an aging portfolio?
    Mr. Schwartz. Has an aging portfolio? It definitely has an 
aging----
    Mr. Torres. And what is the--do you know the age of the 
oldest building in the NYCHA portfolio?
    Mr. Schwartz. The oldest building?
    Mr. Torres. Yes.
    Mr. Schwartz. Is about 65 years.
    Mr. Torres. Longer; 91 years. NYCHA dates back to 1935.
    Do you know how many boilers are in NYCHA's portfolio?
    Mr. Schwartz. Any----
    Mr. Torres. Boilers. The number of boilers in NYCHA's 
portfolio.
    Mr. Schwartz. Boilers are a very interesting subject, as I 
think we both know----
    Mr. Torres. No, I am asking do you know the number of 
boilers in NYCHA's portfolio?
    Mr. Schwartz. Oh. They have 2,300 buildings. Not every--
some buildings have shared boilers, but there are 2,300 
buildings----
    Mr. Torres. So, the answer is----
    Mr. Schwartz [continuing]. on 300 campuses.
    Mr. Torres. The answer is 755 boilers. Would you agree that 
replacing an aging portfolio of 755 boilers is a massive and 
expensive undertaking?
    Mr. Schwartz. It is. One of the big concerns is how it got 
into the position that it is in.
    Mr. Torres. I want to go to elevators. NYCHA has 3,044 
elevators. Would you agree that replacing an aging portfolio of 
over 3,000 elevators, again, is an expensive and massive 
undertaking?
    Mr. Schwartz. We looked at it, and we are not sure that 
there is an industry that can provide that number of elevators 
when they are needed.
    Mr. Torres. I get the basic point. Roofs. NYCHA has 1,764 
roofs. Again, replacing a portfolio of over 1,700 roofs is a 
massive and expensive undertaking. NYCHA is managing property 
on a scale that is unprecedented in the history of our country. 
There is no analog to the New York City Housing Authority.
    In order to operate a property effectively, a property 
owner needs predictability and funding, yet funding for public 
housing is anything but predictable. Funding for NYCHA is 
subject to the whims of congressional appropriations which vary 
widely from year to year. As you know, NYCHA does not receive 
100 percent of the formula funding for which it is eligible. It 
only receives a fraction of its formula funding. What is the 
lowest prorated level of funding that NYCHA has received since 
2001?
    Mr. Schwartz. I do not know.
    Mr. Torres. It is 82 percent. So, suppose you are a private 
landlord, and I were to tell you are only going to receive 82 
percent of the revenues that you expected to receive in the 
midst of rising expenses, rising taxes, rising water and sewer, 
rising utilities. Would you experience that as destabilizing?
    Mr. Schwartz. There would be a very difficult operation----
    Mr. Torres. So, it seems like that is relevant context in 
which to have a conversation about the management of public 
housing.
    Mr. Schwartz. You also look----
    Mr. Torres. I rest my case. My time is expired.
    Chairman Meuser. The gentleman yields.
    The gentleman from New York, Mr. Garbarino, is now 
recognized for 5 minutes.
    Mr. Garbarino. Thank you, chairman. Thank you all, the 
witnesses for being here. I just was smiling--the previous 
questioner--and he talks about the funds and NYCHA not being 
funded properly and only getting certain amount that it is 
entitled--but Democrats in New York, what they have done to 
private landlords under rent regulation and the lack of money 
that they are going to be able to recoup through investment and 
rents and--they are going to be falling in disrepair.
    They are going to actually look like NYCHA properties 
through actions by the State legislature and the New York City 
Council but they will not talk about that. Rent regulation is a 
great thing, but when the funding is needed--Mr. Schwartz, is 
NYCHA's problem a funding problem?
    Mr. Schwartz. It is a complicated problem but the reason--
one of the reasons NYCHA is in the position it is in now is 
that it did not care for the facilities that it had. It did not 
train people. It did not--they do not maintain--the oldest 
heating system in the NYCHA portfolio is about 65 years old, 
and it is still working beautifully today--or it was when I 
left in 2019. It was working beautifully because the 
maintenance people at that particular facility took care of it.
    Mr. Garbarino. Facility, right? I mean, because the reason 
you were there is because HUD, Southern District of New York, 
NYCHA, and the city of New York came to an agreement to put you 
there because of its unacceptable living conditions, including 
mold exposure, elevator outages, and unreliable heating and air 
conditioning, correct?
    Mr. Schwartz. Yes, and without plans to fix it. They did 
not have an approach and what we did was build an approach in 
each of those areas. As I said, despite the corruption, despite 
the other problems, there were important successes.
    Seven thousand fans on buildings and cleaning the vents, 
vents that had not been cleaned for 60 years--I do not even 
know if you could call them vents after 60 years. NYCHA put 
together a team that did that job on budget, on time, and both 
complaints were down 50 percent in those buildings.
    So they had--if they direct it correctly, if they use the 
analytics, if they have a plan you can get things done.
    Mr. Garbarino. I am a supporter of housing authorities. My 
love for my--my family love for them was represented by the 
Islip Town Housing Authority, and they did great work. They 
still continue to do great work. So I am not saying but you 
talk--we heard from the previous member, and you talk about the 
number of buildings under NYCHA's control.
    You mentioned there are--people who manage some of the 
buildings know what they are doing but there are other people, 
bad actors or corruption--I mean, those cases are true. There 
were a lot of people that pled to stealing money from NYCHA, so 
there was obviously corruption going on there.
    When you need this housing for people, when you need honest 
living conditions and there is Federal tax dollars going that 
way, when is--okay, some building managers do a good job; some 
building managers do not do a good job. When do we hit that 
element where there are so many people living here, there is so 
much money being spent here, nothing seems to be getting--
specific example.
    There was a--in November of last year, there was an 
explosion by a--there was a--the building partially collapsed 
on Alexander Avenue because of an explosion in a boiler room. 
Nobody was hurt, thank God, but 84 residents were displaced and 
that boiler issue had been--that issue had been known since 
2018.
    When do situations like this all of a sudden say NYCHA as a 
whole with these building--with the individual building--some 
doing good, some of them not doing good, when does it all of a 
sudden say, okay, HUD or somebody else needs to take over?
    I mean, there is--the original plan for the oversight with 
which you had was for 5 years. So much stuff was not addressed. 
It has to continue.
    When is enough time enough time, and we have to change what 
we are doing?
    Mr. Schwartz. I do not know any precise answer to that, but 
there was a combination you can do. One of the ways we improved 
the heating at NYCHA is to have outside contractors maintain 
the facilities rather than having NYCHA employees do it. The 
record shows private sector, they took care of the maintenance, 
and the operation worked more effectively.
    Mr. Garbarino. I am sorry to cut you off. My time is out. 
Maybe we should get you back over there to manage things 
because it sounds like you have some good ideas.
    Chairman Meuser. The gentleman from New York yields.
    The gentleman from Texas, Mr. Green, the ranking member of 
the Subcommittee on Oversight and Investigations, is now 
recognized for 5 minutes.
    Mr. Green. Thank you, Mr. Chairman. I thank the witnesses 
for appearing as well.
    I am concerned. Mr. Oberdorfer, the Fiscal Year 2026 
appropriations package that passed the House last week cut 
over--overall public housing funding by nearly $500 million 
compared to 2025, including a nearly 15 percent cut to the 
public housing operating fund that allows PHAs to administer 
the program.
    I have a question for you, sir: HUD was formed in 1965 
under the leadership of the Honorable John F. Kennedy, may he 
rest in peace, has HUD or this particular fund, the operating 
fund, ever been overfunded?
    Mr. Oberdorfer. Thank you for that question.
    When looking at historical levels for the operating fund, 
usually it is around 85 to 90 percent or so prorated, meaning 
that for every dollar an agency should get, it gets about 85 
cents to $1.00.
    During the pandemic, there was one spot where it went 
higher than 100 percent, but that was also just because of the 
extenuating circumstances that came from that. So historically, 
no, that fund has never been funded at the amount that was 
determined necessary to be funded by the Federal Government.
    Mr. Green. Is that a very polite way of saying it has never 
been overfunded?
    Mr. Oberdorfer. Yes.
    Mr. Green. Let us move to another point in this. How has 
the lack of funding impacted the agency's ability to provide 
services and maintain properties?
    Mr. Oberdorfer. That is a great question. I think I always 
think about it this way when I am talking to folks about the 
challenges that come from the funding levels that have been 
seen by the public housing both operating in capital fund.
    One, if you think about having an issue with your roof 
where you know you need to go in and fix that, but you do not 
have all of the money necessary to go in and do that, you can 
put a temporary fix on it to have it solved. That costs less 
but we know it does not make the issue go away. In a year's 
time, that is only going to increase the amount of cost to fix 
that issue.
    I think we have seen that happen a lot at agencies who are 
working very hard to make sure those units are as safe as 
possible for their residents but have to deal with the 
difficult reality that they are receiving 85 cents to every 
dollar that was determined by the Federal Government to help 
them with the day-to-day maintenance of those programs.
    Then with capital fund needs for larger modernization 
projects we have seen the highest amount of funding for that at 
3.2 billion but there was a report that came out all the way 
back in 2010 that identified PHAs needed at least 3.4 billion 
per year to maintain all of their capital needs.
    Two thousand ten dollars are very different from two 
thousand twenty six dollars. Even though we have seen the 
number of units decline in the public housing program, we have 
never seen those costs keep pace.
    So again, we are putting temporary fixes on things to make 
sure those units are safe but adequate and full funding is 
necessary to make sure that agencies are able to adequately 
maintain those properties so that we do not run into additional 
issues down the line.
    Mr. Green. Let us move to the housing choice vouchers. Has 
this program ever been overfunded?
    Mr. Oberdorfer. So, with the housing choice voucher 
program, there are two accounts. There is a housing assistance 
payment which is the rent that goes to tenants. Typically, we 
see that at close to full funding. I would want to point out 
the second account which is the housing choice voucher 
administrative fee.
    That is the funding that agencies use to help folks get 
leased up, to help them manage their programs, make sure they 
are in compliance, make sure proper oversight is done.
    When looking at the admin fee, we have not seen full 
funding for that since 2003. In fact, in the Fiscal Year 2026 
bill that just passed, it would put it at about 82 cents for 
every dollar that the administrative fee formula determines 
agencies would need to run their voucher programs.
    Mr. Green. I find it quite interesting that the programs 
are underfunded, and someone has concluded that the solution is 
to underfund. Programs need additional funds, then get them but 
then the solution becomes, well, let us cut. Let us cut the 
programs. Let us cut the funds. I do not comprehend the logic. 
I yield back.
    Chairman Meuser. The gentleman yields.
    The gentleman from Nebraska, Mr. Flood, the chair of the 
Subcommittee on Housing and Insurance, is now recognized for 5 
minutes.
    Mr. Flood. Thank you, Mr. Chairman.
    First I would like to thank you for having this important 
hearing today. It is essential that we use our oversight 
responsibility in this committee to ensure PHAs are living up 
to their mission and utilizing taxpayer dollars appropriately.
    In New York City and Atlantic City, we have seen evidence 
of rat infestations, and in Indianapolis and Omaha we have 
heard reports of bed bug infestations.
    Mr. Haller, can you please speak to the pest and vermin 
infestations that you have seen in Indiana and explain why it 
took so long to resolve those issues?
    Mr. Haller. Unfortunately, Indianapolis is one of the 
hotspots for bed bugs. You are correct there. They are very 
difficult to treat and very expensive. So that is one aspect of 
it. We saw rodents as well. That tends to correspond with not 
having enough trash removal. Services are allowing trash 
compactor systems to get backed up and things like that.
    Again, I think when it comes to regular maintenance, making 
sure those very basic things are done right, including 
preventative treatments on a regular schedule, that is how you 
ultimately prevent those situations from getting out of 
control.
    Mr. Flood. My second question, Mr. Haller. Your written 
testimony references the need for stronger inspection 
standards. However, we were hearing concerns that the New 
Albany Housing Authority instructed maintenance workers to do 
shoddy fixes in an attempt to actively mislead inspectors. Can 
you commit to having your office look into these allegations?
    Mr. Haller. Congressman, I would very much appreciate if 
you would share that information with us, and we would be happy 
to correspond with you about that.
    Mr. Flood. Appreciate that.
    One common issue we have seen with PHAs is that boards and 
senior executives often have no experience in real estate, 
property management, or the like. These are political patronage 
jobs, and they sometimes have no business running a PHA.
    Mr. Ozdinec, can you describe how having experienced boards 
and senior execs impacts the quality of services provided by 
PHAs?
    Mr. Ozdinec. Yes. Thank you for the question.
    That was one of the goals of the HOPE VI demonstration in 
the early 90s, was to increase the level of sophistication of 
executive directors and their understanding of the real estate 
processes and principles in the private market.
    Housing authorities had up until that period of time never 
had to worry about how to administer and manage public housing 
the way everybody else does with reserves, understanding you 
had to collect enough rent to cover your expenses, the basic 
principles of property management.
    I think we made great strides with HOPE VI and in raising 
level of sophistication of executive directors and their staff 
to understand how private multifamily property managers manage 
their portfolios and to use the best that is available for 
their own operations.
    Mr. Flood. Mr. Schwartz, do you believe that property 
managers should have relevant experience and how important is 
that?
    Mr. Schwartz. I think it is important--one of the 
recommendations we made to NYCHA which they adopted was to 
separate the job of chairman and CEO so that--we looked to the 
chairman to be the person, really, the Mr. Outside or Ms. 
Outside, to deal with the agencies, and then the CEO to be the 
operational person. It was not--it was too much for one person, 
especially at a--size of NYCHA.
    The other thing we recommended is that--and this is one of 
the few things that I recommended that actually cost money but 
I recommended that the board should have a budget and that the 
members of the board should have the opportunity to engage 
specialists and to help them as they look at the 
decisionmaking, whether they need an architect or an engineer--
--
    Mr. Flood. Sure.
    Mr. Schwartz [continuing]. something to help them make an 
educated decision.
    Mr. Flood. So yesterday myself along with Chairman Meuser 
and Chairman Hill sent letters to 32 PHAs designated as 
``troubled'' by HUD, including the OHA, requesting information 
on how they ensure the physical safety and financial 
sustainability of their properties. I do not have much time 
here.
    Mr. Schwartz, Well each PHA is different, what are some of 
the best--briefly--best practices that people can--that PHAs 
can implement to quickly respond to residents' needs and abate 
hazards? To the extent I only have 17 seconds left, I would ask 
that you answer that question on the record with the help of 
committee staff.
    With that, I yield back.
    Chairman Meuser. The gentleman yields.
    I would like to thank all witnesses for your testimony 
today. Without objection, all members will have 5 legislative 
days to submit additional written questions for the witnesses 
to the chair. The questions will be forwarded to the witnesses 
for their response. Witnesses, please respond no later than 
March 17, 2026.

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

    This hearing is adjourned.

    [Whereupon, at 3:46 p.m., the subcommittee was adjourned.]

                                APPENDIX

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