CONTENTS H.R. 12749 (by Mr. Fauntroy, et al.) a bill to amend the District of Columbia Self-Government and Governmental Reorganization Act with respect to the payment of revenue bonds issued by the Council of the District of Columbia for the activities of a housing finance authority... H.R. 13243 (by Mr. Fauntroy, et al.) a bill to amend the District of Columbia Self-Government and Governmental Reorganization Act to authorize the Council of the District of Columbia to delegate its authority to issue revenue bonds for undertakings in the area of housing of any housing finance agency established by it and to provide that payments of such bonds may be made without further approval___. Revenue Bonds for Housing Finance Agency, committee report 951391... Page 2 39 51 Webb, Edward B., Jr., general counsel, on behalf of Sterling Tucker, 12 Winter, Hon. Nadine P., chairperson, Committee on Housing and District Government: Coppie, Comer, special assistant to the mayor for Budget and Manage- Jacobs, Lorenzo, director, Housing and Community Development. Rees, Thomas, attorney at law, Washington, D.C... MATERIAL SUBMITTED FOR THE RECORD Corporation Counsel's opinion on Council authority Council of the District of Columbia, Sterling Tucker, chairman, letter, Standard & Poor's Corp., letter, dated June 13, 1978, to Congressman 7, 23, 31 9 23, 24 3 8 11 31 30 3 Impact of a District Housing Finance Agency.. Intent of Congress re bond issuance.. Legislation needed... Marketability of revenue bonds_ Necessity for District of Columbia Housing Finance Agency_ Need for H.R. 12749_. Need for legislation___ Paying off the bondholders _ _ Proposed amendments to H.R. 12749_ Revenue bonds for financing..... 50 1 1 1 1 HEARING AND MARKUP ON H.R. 12749 REVENUE BONDS FOR HOUSING FINANCE TUESDAY, JUNE 20, 1978 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON FISCAL AND GOVERNMENT AFFAIRS, Washington, D.C. The subcommittee met, pursuant to notice, at 9:40 a.m., in room 1310, Longworth House Office Building, Hon. Ronald V. Dellums (chairman of the subcommittee) presiding. Present: Representative Dellums, Delegate Fauntroy, and Representative Whalen. Also present: Robert Brauer, subcommittee staff assistant; James T. Clark, legislative counsel; Margi Hall, staff; Harry M. Singleton, deputy minority counsel; and David C. Patch, minority legislative staff. STATEMENT OF REPRESENTATIVE DELLUMS Mr. DELLUMS. We open our hearings this morning by considering H.R. 12749, a bill to amend the Home Rule Charter to exempt revenue bonds sold to finance a District of Columbia housing finance agency from the congressional appropriations process. This legislation is necessary to insure the marketability of the bonds. As long as principal and interest are subject to a line item veto by Congress, the bonds will not be attractive to prospective investors. It is important to note that these bonds would not be debts or obligations of the District of Columbia, and the District government would bear no financial liability for the housing projects and related facilities financed by the agency. A bill to establish an agency to provide housing and financial aid to low and moderate income families similar to agencies established in 41 States passed the Committee on Housing and Urban Development and is before the full Council. Also to be considered this morning is H.R. 12717, a bill to provide for the transfer of title of a vacant parcel of land adjacent to the southwest urban renewal project area C to the District of Columbia Redevelopment Land Agency. The title is currently held by the United States. In addition, the subcommittee will mark up H.R. 10311, a bill that clarifies the plan modification provisions of the Redevelopment Land Agency Act of 1945 and amends the southwest urban renewal plan C to allow low and moderate housing to be built on parcel 76 and to permit expansion of the Channel Inn. A hearing was held on H.R. 10311 on April 18, 1978. Markup on H.R. 10671 and H.R. 10659, previously announced, will be postponed. We learned late Friday night that Judge Gesell's decision that ruled unconstitutional the law requiring elected officials to resign before running for another office is being appealed. We will consider these bills after the appellate court's decision is known. Our first witness this morning, on H.R. 12749, is my distinguished former colleague and now attorney at law, Mr. Thomas Rees. [The bill, H.R. 12749, follows:] [H.R. 12749, 95th Cong., 2d sess., by Mr. Fauntroy (for himself, Mr. Diggs, and Mr. McKinney) on May 17, 1978] A BILL To amend the District of Columbia Self-Government and Governmental Reorganization Act with respect to the payment of revenue bonds issued by the Council of the District of Columbia for the activities of a housing finance authority Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 490 of the District of Columbia SelfGovernment and Governmental Reorganization Act, relating to revenue bonds and other obligations, is amended by adding after subsection (f) the following new subsection: "(g) The fourth sentence of section 446 shall not apply to (1) the expenditure of funds derived from the sale of any revenue bond, note, or other obligation issued pursuant to an act under this section solely to finance, or assist in the financing of, the activities of any housing finance authority established by the the Council, or (2) the payment (as to either principal or interest or both) of any such bond, note, or other obligation." STATEMENT OF THOMAS REES, ATTORNEY AT LAW, WASHINGTON, D.C. Mr. REES. Thank you, Mr. Chairman. It is good to be back here again as a volunteer, working on District matters. The purpose of my testimony this morning is to discuss the problem the District of Columbia has in its charter in regard to revenue bonds. The major program for the development of housing throughout the country-this is housing which is leased or rented-It is developed by private developers and then leased to the jurisdiction. In many cases, the jurisdiction itself can construct the houses with rent being a portion of the tenant's income. This has become the major thrust of housing programs in the United States. The old, traditional public housing projects have been phased out so that this program, that was developed during the Ford administration is still being pushed by the Carter administration. So it looks like we will be dealing with section 8 for quite a few years to come. NECESSITY FOR DISTRICT OF COLUMBIA HOUSING FINANCE AGENCY We have a problem with section 8 in that there is a statutory setaside for State housing and finance and development agencies. This is a section 8 set-aside so that those standing in line first to get their funds from HUD, are those that are represented as having State housing finance agencies or local development agencies. The District does not have this kind of an agency and, therefore, is standing behind all this large group, the great majority of the States with housing finance agencies; and all of this group will receive their funds first, and then after all the set-aside money is taken care of, the balance, whatever that might be, is then distributed to those jurisdic tions that do not have a housing finance agency. It is absolutely necessary that they have a housing finance agency here in the District because, at the present time, the District is not receiving anywhere near their full potential of funds from HUD for the development of housing. DISTRICT HOUSING There is a problem with housing in the District. You have with rent control, which I don't particularly like, and when you have rent control, it means that existing housing usually is not rehabilitated-this is rental housing-and not many new builders come in to construct rental housing because they are not quite sure what rent control will do. They feel they won't be able to get what they feel is a reasonable return on their investment. As a result, rental units have not been constructed in the District of Columbia. Those units which are being constructed and which are multifamily units tend to be condominiums which people buy, and, of course, those in lower to middle income areas simply cannot afford to purchase a condominium. As a result, we have a very bad situation in the District of Columbia. You can see it right here on Capitol Hill where property taxes are going up, housing values are going up, those families that were lower to middle income and lower income are being forced out of this immediate geographical area surrounding the Capitol because their tenants and landlords are selling or rehabilitating the property, putting in condominiums or something else with it. But they are not putting it into lower income housing. REVENUE BONDS FOR FINANCING The one way the District can get lower income housing, section 8 housing, is through a section 8 set-aside through a housing finance agency. Why don't we have a housing finance agency? We could and the Council has been working very hard to develop legislation on this, but still a housing finance agency without the ability to issue revenue bonds is a housing finance agency that only has one arm with which to fight because they don't have that ability to go out in the market and borrow money. GENERAL OBLIGATION BONDS The reason thay can't issue revenue bonds is that there is an ambiguity in the city charter regarding the position of repayment on revenue bonds. Let me go into two kinds of bonds, general obligation bonds versus a revenue bond. GENERAL OBLIGATION BOND V. REVENUE BONDS A general obligation bond is a bond backed up by the full faith and credit of a jurisdiction, let's say the District of Columbia. You have the same situation in New York, for example, with their current financial crisis. You have the situation in California and I suspect the lawyers in California are going to do very well interpreting Proposition 13 because the general obligation is backed by the full faith and credit of the jurisdiction. |