Building a Solid Foundation: Restoring Trust and Transparency in Public Housing Agencies

[Gavel sounds.] The Subcommittee on Oversight and Investigations will come to order. [Gavel sounds.] I jumped the gavel a little bit there. Without objection, the chair is authorized to declare 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 five legislative days within which to submit extraneous materials to the chair for inclusion in the record. As chairman, I now recognize myself for four minutes for an opening statement. Public housing agencies, PHAs, administer HUD's public housing programs at the local level. Combined, these programs account for roughly $40 billion in federal funding annually and serve approximately nine million Americans through more than 3,300 housing authorities nationwide. Secretary Besant recently estimated 10 percent of taxpayer funds are lost to fraud. 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 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's no cherry-picking here, it's this is widespread. So these numerous examples of corruption are just 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, and cases of corruption make 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. And I yield back. I now recognize the ranking member of the subcommittee, Mr. Green, for four minutes for his opening statement.

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's 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 its 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 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 two 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.

The ranking member yields back. We'll now move to witness testimony. If the chairman of the full committee or the ranking member committee come in, we will yield to them for their opening statements, but we will start and welcome for testimony 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 five-year monitorship, Mr. Schwartz and his team oversaw the implementation of a HUD agreement aimed at reforming NYCHA to improve residents' living conditions. Mr. Schwartz received his bachelor's degree from the University of Pittsburgh, we like that, and his Juris Doctor 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's 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 he received his Juris Doctor 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 two 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. We thank each of you for taking the time to be here. Each of you will be recognized for five minutes to give an oral presentation of your testimony. Without objection, your written statements will be made part of the record. Mr. Schwartz, you are now recognized for five minutes for your remarks.

Thank you. My name is Bart Schwartz and I'm the chairman and co-founder of Guidepost Solutions, a global investigations, compliance, and consulting company of about 300 full-time employees. I'm also an attorney and I was chief of the criminal division of the US Attorney's Office in the Southern District of New York. And 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, and I turn to the corruption aspects of the monitorship, it was that team that developed the information that resulted in 70 indictments by the US Attorney's Office in the Southern District. The investigators visited developments across the city and 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 US Attorney's Office. As far as I can tell from the public record, in 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. And 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's 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 who have been non-competitive 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 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 our mold action plan, NYCHA installed new and performed major repairs on approximately 7,000 ventilation 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 created, NYCHA had no definition for clean. We created definitions with photographs and so forth. And 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.

Mr. Haller, you are now recognized for your five-minute remarks.

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, 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 six and a half million residents. About 2.1 percent or 146,000 of them live in federally subsidized housing as of 2023. 76 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 five and an agency of 400 public servants, has aggressively enforced state housing laws over the past five 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 the Indianapolis Housing Agency, which administers HUD funds for low-income elderly and disabled residents via Section 8 vouchers and other HUD programs. Despite a 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 access, 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 IHA, mandating licensed property management, stronger security protocols, and regular inspections for a period of two years. Attorney General Rokita also visited the building in December of 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 residents 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 of 2024, we sued the owner of Bingham Square Apartments in Anderson, Indiana, after the owner abandoned tenants. After dozens of failed housing quality standard 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, an 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.

Gentleman yields. Thank you for your compelling testimony as well. Mr. Ozdinec, you are now recognized for five minutes for your remarks.

Thank you, Mr. Chairman, distinguished members. I appreciate the opportunity to testify today. My name is Milan Ozdinec and I'm a retired HUD executive who spent my entire life in the public housing operations field. 33 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'm 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 significant and important. The Hope VI program, which some of you may be aware, was born 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 two 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 the 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's 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. And I understand Chase's point and clearly that's happening in Indianapolis. The first thing that we did was we established the Real Estate Assessment Center. We converted public housing accounting to GAAP. Receiverships were strengthened and 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 troubled. So it's a persistent problem. We need to figure out what the answer is. Our development program was improved to include mixed-financed 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 could look at those. Somebody needs to speak for the real estate here. We've got 887,000 units. How do we intend to move forward and hopefully I'm able to help answer some of those questions. Thank you very much for the opportunity to testify and I'm here available to answer any questions you may have.

Thank you, Mr. Ozdinec, for your testimony. We will now move on to Mr. Oberdorfer. You are now recognized for five minutes for your remarks.

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'm 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. And 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 8 Management Assessment Program, or SEMAP, for the Housing Choice Voucher program. And 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, HUD 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 an active SAM.gov registrations. In these cases, assistance was properly paid to eligible families, but the vendor registration needed reactivation. That's an easy fix. When this technical category is removed, the program's improper payment rate drops from 5 percent to just over 1 percent. And 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 are 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 risk. 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. But 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 allow agencies to house more families. Lastly, 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.

Thank you. We will now turn to member questions as the chair. I now recognize myself for five minutes. Mr. Haller, the Indianapolis Housing Authority was designated by HUD as a troubled PHA and later taken over by HUD. Can you please describe beyond what you stated in your opening testimony some of the conditions at IHA when it was designated as troubled?

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 of 2024, so we were a year, year and a half into our investigation into the circumstances at Luger Tower Apartments. We were also receiving lots of complaints related to other properties maintained by IHA. We had a distinct focus on Luger Tower because that's a tower that, it's 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 weren't 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.

Have the conditions improved over the last year?

That is a, it's a difficult question to answer because it's, there's 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's working with them to turn around the agency. But I think one of the lessons we've learned there is that that help really should have come many years ago.

I agree. What are you putting into place now to improve that situation, or what's being put into place?

Sure. So right now, we actually have a second settlement agreement we've signed with the new owner of the property, with the owner of the property, which has more public transparency to it. So 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.

Thank you. 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 any way you'd like actually, the corruption schemes that occurred at NYCHA and the level of sophistication or unsophisticated?

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. And 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. So as I said, this is something that really hurt the residents in their homes.

Sure. If you can with your experience and background maybe provide us, perhaps in writing if you wouldn't mind, some best practices that you feel would improve those such PHAs. I don't have time for the answer now, sir, but if you would be so kind to do that.

I do have a couple of thoughts, and it's not just for PHAs, it's for companies, it's for a lot of organizations I work with. And that is to create a culture where there is integrity and there's respect for the work that you do, and that you are trained to do the work that you're supposed to do. There was a lack of training. We made great strides once we brought in private sector people who were teaching NYCHA employees how to do their work.

Right. Thank you very, very much. Mr. Ozdinec, my apologies. When, what reason did HUD stop reporting improper payments? It was during your time at HUD, we would submit a testimony of improper payments annually and then HUD has ceased doing that. I'm out of time, so I'm going to ask you if you wouldn't mind we could concur on that afterwards or provide it in writing. I yield back. I am now, ranking member Waters is recognized for five minutes of questioning.

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, etc. 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. And at one time, it was in my congressional district, and then I was reapportioned, and they were out, and now they're 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 I created people to go out and find jobs. And for the people that we trained in my program, we connected them, and it has worked as a matter of fact. In Nickerson Gardens, I have two young former gang bangers who we got jobs. And they were responsible for helping to lay cable back when they were putting cable into public housing. And they ended up managing, and they just retired with homes, children have gone to college, and all of that. Now, first of all, we've 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've been working on it for years. And so I don't 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, yeah, I say get rid of them, know what you're doing. But one thing I've learned is not one public housing program that I've 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 was 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 a public housing assistance, you just put them in there. And many of them have had no experiences, they've been going from place to place to place to place, and all of that. That I've not seen done. The other thing is how to identify leadership inside the public housing. Because people who come in saying I'm your role model and this is what I want you to do does not work. But you have to identify leadership that's 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 developments in my district, who has ended up in a way that they're developing, renovating, doing just wonderful things. And guess what? 50 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're not in the eight-hour job all over the public housing developments. And so, first of all, you've got to have money. And this business about we are doing it but it doesn't cost anything, I don't buy that. It costs money, it costs investment. Section 3, we have it in law, and it's not being utilized, it's 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've done it, I've created programs, and the thing about it is you've 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.

The ranking member yields back. The gentleman from Arkansas, the chairman of the full committee, Chairman Hill, is now recognized for five minutes.

Thank you, Mr. Chairman, and thank the ranking member for her knowledge and passion about accountability in public housing. We're grateful for her decades of passion on this topic. I want to reflect on the panel. It's a very good panel. Thank you for your testimony about what we're 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 the Metropolitan Housing Allowance, was put in the troubled PHA category. And among an extensive list of deficiencies were lacked internal controls since 2016, financial reporting, record keeping, none of those impacted or are met HUD standards. And $30 million is missing, and nobody can find where it went. And then 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's why it's 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 Luger Tower?

My understanding with Luger Tower, Congressman, is that yes, it went through a RAD conversion and is now owned almost fully by a private investor.

And was that contract a bad contract that then said it was inadequately like an inadequate cash reserve fund and inadequate rental collection process and inadequate safety program and inadequate tenant whistleblower assistance program because we just modernized Luger 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?

I think what we've observed with Luger Tower in Indianapolis, I think that's a fair assessment that in that particular case, that program has actually significantly hurt the tenants who live there. And they would tell you that if they were here today.

What's the biggest weakness there, the contractual right between the RAD owner, developer, and are the people too optimistic about the management expenses and the rent 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.

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?

So let me stop you there and say who's responsibility of that? Indianapolis Housing Authority, the office of HUD in Indianapolis, the regional office? Who says that that was good to go contractually to do that program? And does anybody bear any responsibility besides who?

That I can't really speak to that specific RAD conversion, it was many years ago. I know one of the difficult parts is assigning accountability when you've had potentially years of poor performance.

Let me stop you there, Mr. Ozdinec, since you were a former long-time HUD leader in public housing as a DAS there, who's to be held accountable for that?

Thank you for the question, Congressman. I, you know, we've got 2,300 public housing authorities. We're going to have Indianapolises, unfortunately. And I think the remedy for these types of aberrant situations like Indianapolis is oversight.

Okay, let me stop you there. This is my whole complaint. Regardless of whether the HUD's adequately funded or inadequately funded, there's no oversight. No one takes any responsibility. That's what I've seen in Little Rock. Zero responsibility. Zero responsibility at the HUD local office, the board, city board, and they've 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's no restitution. So I yield back, Mr. Chairman, I commend you for this hearing.

The chairman of the committee yields back. The gentlewoman from Georgia, Miss Williams, is now recognized for five minutes.

Thank you, Ranking Member Meuser and well, thank you, Chairman Meuser and Ranking Member Green. I'm 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 OIG found that HUD field offices were inconsistent in overseeing whether public housing authorities corrected life-threatening deficiencies identified during inspections, and that HUD didn't even track public housing authority's corrections of non-life-threatening safety deficiencies. This is problematic. I'm 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've 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?

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. 2023 is an interesting year for public housing inspections because that's the year a new protocol went into place. This is the INSPIRE or National Standards for the Physical Inspection of Real Estate. And 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're 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 that 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. But 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. But 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.

Thank you. And 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 CEO and Millennia Housing, prohibiting 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 five 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 five-year prohibition expires. Mr. Ozdinec, can you please describe the role of HUD in debarring bad actors in the field, and describe the role of debarment in restoring residents' trust in HUD and their local public housing authority?

Thank you very much for that question. I'm 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 don't know in again in your example where the responsibility lies there, but clearly the department took steps and debarred the vendor that you mentioned.

Thank you, and I am grateful for this conversation today because our people back home in every district across the country deserve safe, desirable living conditions.

Agreed. Gentlelady yields back. The gentlewoman from Missouri, Mrs. Wagner, the chair of the subcommittee on Capital Markets, is now recognized for five minutes.

I thank you, Mr. Chairman, and thank our witnesses. For decades, mismanagement, waste, fraud, 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 East St. Louis Housing Authority were a product of mismanagement and most importantly fraud. Mr. Schwartz, similar issues occurred at the New York City Housing Authority. Based on your work, what systems within public housing agencies are most susceptible to waste, fraud, or abuse?

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 agency.

So 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?

Well, procurement is a good starting point because they have the analytics, or they should have the analytics to figure out who is doing 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. And how can these agencies mitigate the risks that their employees are even accepting bribes that we've seen? 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 people what was going on, we listened to the residents. The residents know what's going on. They can tell you what the problems are.

Well, that's very interesting. I mean, we've seen employees falsifying eligibility information, work orders, on and on. So you think the root of this is oversight by leadership but also in talking with residents?

Yes, leadership is primarily responsible because it doesn't create the culture of honesty and integrity. All organizations have to deal with this. The housing authorities aren't different. But I don't think that HUD requires a code of conduct. We couldn't find a code of conduct at NYCHA.

They don't require a code of conduct for their employees? We couldn't find one at NYCHA. All right. Well, during your monitorship, you found a culture of, I think you said defeatism and failure at the New York City Housing Authority. How did this culture impact residents?

Excuse me? How did it impact residents? Oh, it was as I said before, it's really at the level of the resident where all the damage was being done, where the work that was the shoddy work was was used. You can't be naive about this. When somebody pays a bribe, the bribe doesn't come out of their pocket. When it comes time to do the work, they don't bring in union labor. They don't bring in labor that has skills. They don't bring in the materials they're supposed to bring in. They make up for the bribe. And who suffers? The resident.

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. And unfortunately, HUD looks like it 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?

Thank you for that question. 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.

My time's expired. If there's anything you have to add to that, you could do so in writing. I appreciate this hearing and I appreciate all the work that we need to do collectively. We've heard a lot of good ideas about oversight, etc. Thank you, Mr. Chairman, I yield back.

Gentlelady yields. The gentleman from California, Mr. Liccardo, is now recognized for five minutes.

Thank you. Thank you all for your testimony today. Mr. Ozdinec, I was interested in particular in your written testimony in which you acknowledged that the Brooke Amendment, which provides for basic rent protections for tenants, has never been adequately funded by the federal government. Do you have any 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?

Thank you for that question. I think that's always been a debate. You know, we fund the operating fund at 92 percent or call the percentage proration whatever you will, but it's never 100 percent of what the experts believe is needed to administer our programs.

...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?

So that was one of the original controversies about the HOPE VI program would be displacement. You know, we're 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. So you know, the methods used to do redevelopment, 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 don't know. But setting a standard for good government locally is really critically important.

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 or are we literally taking the same exact structure, remodeling it, and some folks who had rent restrictions no longer have them?

Excellent question. Thank you, Congressman. As the public housing inventory drops, we're now at 887,000 units, the Section 8 program goes up in terms of the number of 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.

Could I interrupt you for a moment? Does this imply then essentially that we need a greater commitment to housing choice vouchers if we're going to make this work?

Far be it for 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 serve. And I'm not sure if you've read the Raj Chetty, Raj Chetty, yes, I'm familiar. You know, it's unbelievable. You know, 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 to me. It was a capstone of my career to know that the things that we did as a government had an impact.

I appreciate that, sir, and I do appreciate Mr. Chetty's research and it's 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.

Thank you.

Gentleman yields. The gentleman from Georgia, Mr. Loudermilk, is now recognized for five minutes.

Thank you, Mr. Chairman, and thank you all for being here this hearing. Earlier today we had a hearing on housing but in the private sector, and part of that conversation was the compliance cost the private industry has with complying to regulations. We see that in across the financial services sector, even in small banks where you have to move personnel away from doing a productive job to do compliance. And I'm sure that we see the same thing in public housing, especially to the extent that there's a long list of regulations and reporting requirements that PHAs must follow. And as you've heard from Mr. Schwartz, it's 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? Okay, thank you. What impact do the current reporting requirements have on public housing agencies?

In my view, significant impact. 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. And I think this is every administration has a regulatory agenda, so it'd 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. And you know, at the end of the day, will it help the financial burdens that housing authorities suffer from complying with, and 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, you know, the various component parts of the Section 8 program.

Are these regulations modernized over time? I mean, we're looking at issues even with the Bank Secrecy Act to where you've got currency transaction reports of $10,000, which was established in 1972, which really would equate to $87,000 a day. We are really slow at modernizing our regulation from here, but you're saying the housing regulations are kept in pace with technology, in pace with the current economy?

No, they are not, unfortunately. And I it breaks my heart to say it, but we've underfunded public housing authorities and, you know, told them to keep up. And they do, and we've got a $70 billion, arguably $70 billion backlog of physical need. And we spend a lot of administrative money taking care of the compliance issues, rightly so. But there is a cost to the system.

Can we benefit from modernizing the regulations or tailoring the regulations?

I believe so. And I'll 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's a tool to the department is Section 6(j) of the Act. You know, receivership is the death penalty for housing authorities and shouldn't be taken lightly because it has costs in addition to the cost of running an agency. It has costs associated with the receivership as well.

All right, thank you. Mr. Schwartz, since we're 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?

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. And so the elevators improved, heating improved, training improved. Training is key to this, to all of these things. And if I might add just to the past prior question, there are two kinds of compliance really, there's regulatory and there's integrity. Integrity doesn't require a lot of money. You just have to live it and prove it and remind people. Regulatory is more expensive.

Well, thank you for that and I you make a good point because just in my own home state of Georgia late last year, a senior executive of the 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're trying to protect. Mr. Chairman, I yield back.

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

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, won't the imposition of time limits make it harder for voucher holders to secure housing since many private landlords would likely prefer a tenant who won't have to be replaced in the near future?

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. And one of the biggest benefits of the housing choice voucher program is the stability that landlords have with the program, right? There's a guarantee.

Do you think landlords are going to leave the program because of this? I mean, we call it time limit, but let's be honest, they're just going to let the stuff expire and then they have no way of getting paid.

Yeah, the lack of consistency would make it less desirable to be a landlord for the program.

Also won't the higher turnover and vacancies make it harder for affordable housing developers to make projects pencil, you know, pencil out there by deincentivizing investment in affordable housing that we desperately need right now in our country?

Yes, again, when doing redevelopment for these affordable housing projects, that stable income coming from rent is critical and making sure that it's the right amount of stable income is especially important to that.

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 abandoned these policies. Is that correct?

That is correct. And 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 components...

They should check out my Economic Dignity for All package. Yes, it's very important, yes. Mr. Oberdorfer, do you have any reason to believe that these barriers have suddenly disappeared?

No, I do not.

Have your members expressed concerns with the proposed changes to you directly?

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're seeing costs for rents continue to go up. We are not necessarily seeing costs of income for folks go up, so it does make it a little bit of a challenge.

And you know 81 percent of non-disabled HUD participants without young children were employed. 81 percent were employed in the past year. Those not working are typically attending school, providing care, or have 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?

Yeah, that's 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. And I think that goes back to the complexities of the regulatory compliance for these programs. Again, I think it's 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 compliance.

It's common sense to me. I mean, it's 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?

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 doesn't happen and there needs to be the proper implementation timeline to ensure that those families aren't there aren't families impacted that shouldn't be.

Is this statement true, that this is not evidence-based policymaking?

I would say when looking at the population that most of these programs serve, it is a small amount of individuals that would fall under these requirements. So...

I'm frustrated for your members, just so you know. I feel like we're constantly trying this stuff over and over again, even though we've noticed we have actual evidence that shows it doesn't work.

Yeah, and I would I know you mentioned this as well, but some of the information that's come from the moving to work agencies that have tried this, it's a really interesting read to see what it looks like when implemented on the ground.

Well, thank you. Thank you. I yield.

Gentlelady yields. The gentleman from Florida, Mr. Haridopolos, is now recognized for five minutes.

Thank you, Mr. Chairman, and again happy birthday to you, my friend. Great to see you. I'm going to keep it a wide-open question. I know you guys have answered some very detailed questions, but as a new member of the committee, what I want to get a general feel with this is I'll ask Mr. Schwartz and Mr. Ozdinec about this as well, if you don't mind. Mr. Schwartz, you've 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've seen the good, the bad, and the ugly, I would imagine there's 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's 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's the best thing we could be doing right now in Congress to change the dynamic for the better?

Thank you for that question. My experience with NYCHA and public housing is not 30 years, it's really since I got involved with NYCHA, but it felt like 30 years. Okay. It goes back to something I said before, drawing a difference between regulatory compliance and integrity compliance. And the reason that I go to that is because integrity compliance is not expensive. You don't have to throw money at integrity compliance, 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. So I would say that HUD should have a code of conduct at every housing authority, no matter what size the 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 where people are not being honest. You have to create that culture. And I don't know whether that's for Congress, frankly, whether that's for Congress, but it certainly is for HUD that HUD should take responsibility for that. When you don't pay attention to it, you're really sending the message that you don't care.

Okay, thank you. And if I could do the same for Mr. Ozdinec, if you don't mind, give me your perspective, I'd appreciate it.

Thank you very much. You know, there's going to be bad actors everywhere. You cannot legislate for stupidity or crime. And I feel bad 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're in a position of authority and you're directing families to specific neighborhoods. I mean, the obviousness of that wrong, you can't legislate for. So we can try to produce a regulation 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's complicated, it's hard work. I think Eric will attest to what his members deal with consistently. But you can't legislate or regulate for crime. And there needs to be some way to deal with that component part when you get a bad actor, recognize it and do something about it.

Well, I mean, I was asking you, you've been there for a while. I mean, you said there needs to be some way. So what's the way? You've been there for a while, what do you think is the way?

I don't know the answer to that. I don't 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. And while they didn't take a vow of poverty, they didn't go out and use their position to aggrandize themselves financially.

Mr. Haller, do you have an opinion on this subject?

I think what I can offer, Congressman, is that the lack of accountability we've seen, not even just with PHAs but other like project-based rental assistance properties and things like that, as the example I gave was the Bingham Madison Square case that we filed. I mean, you're 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, and 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's appropriate. I think that's the only way you can make sure that folks are held accountable.

I yield back, Mr. Chairman. Thanks for the time.

Gentleman yields back. The gentleman from New York, Mr. Torres, is now recognized for five minutes.

Thank you, Mr. Chair. Mr. Schwartz, in your testimony, you rightly describe NYCHA as an irreplaceable asset for the city of New York. And I worry you were invited to testify not to underscore the irreplaceable value of public housing, but to discredit and delegitimize public housing so that it's 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?

I don't know if that's a question for me really to...

You have no opinion on the funding levels? Well, I have an 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 loss is an example of the federal government treating public housing as an irreplaceable asset?

I don't think that's the fair question for me. But you were the monitor for public housing for five years. And funding is clearly relevant to the operation of public housing. And I wanted to be the monitor because I think NYCHA and public housing authorities are so important.

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?

Oh, yes, I think there is a funding crisis. The question is why does it have a funding crisis? And there are many aspects to it.

Well, who which level of government is the primary funding source for public housing?

Well, I think the initial level is the public authorities themselves and in the way they're managed.

It's the overwhelming source of funding for public housing. How much capital funding does NYCHA receive annually?

I forget now. It's I forget the number. It's a huge number.

$700 to $800 million. Do you acknowledge that NYCHA has an aging portfolio?

Has an aging oh, it definitely has an aging...

And what is the do you know the age of the oldest building in the NYCHA portfolio?

The oldest building is about 65 years.

Longer. 91 years. NYCHA dates back to 1935. Do you know how many boilers are in NYCHA's portfolio?

Any boilers? Boilers are a very interesting subject as we both know.

No, I'm asking do you know the number of boilers in NYCHA's portfolio?

Well, they have 2,300 buildings. Not every some buildings have shared boilers. But you have 2,300 buildings on 300 campuses.

The answer is 755 boilers. Would you agree that replacing an aging portfolio of 755 boilers is a massive and expensive undertaking?

It is, and the one of the big concerns is how it got into the position that it's in.

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?

We looked at that and we're not sure that there is an industry that can provide that number of elevators when they're needed.

I get the basic point. And roofs. NYCHA has 1,764 roofs. Again, replacing a portfolio of over 1,700 roofs is a massive and expensive undertaking. I mean, NYCHA's 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 in funding. Yet funding for public housing is anything but predictable. Funding for NYCHA is subject to the whims of congressional appropriations, which varies widely from year to year. So 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?

I don't know.

It's 82 percent. So suppose you're a private landlord and I were to tell you you're 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?

That would be a very difficult operation to run.

So it seems like that's relevant context in which to have a conversation about the management of public housing. I rest my case. My time has expired.

Gentleman yields. The gentleman from New York, Mr. Garbarino, is now recognized for five minutes.

Thank you, Chairman, and thank you all for the witnesses to be here. And I just was smiling at the previous questioner and he talks about the funds and NYCHA not being funded properly and only getting a certain amount that it's entitled. But the Democrats in New York, what they have done to private landlords under rent regulation is and the lack of money that they're going to be able to recoup through investment and rents and you know, they're going to be falling into disrepair. They're actually going to look like NYCHA properties through actions by the state legislature and the New York and the New York City Council. But you know, they won't talk about that. That rent regulation is a great thing, but when the funding's needed. Mr. Schwartz, is NYCHA's problem a funding problem?

It's a complicated problem, but the reason one of the reasons NYCHA is in the position it's in now is that it did not care for the facilities that it had. It didn't train people, it didn't they don't maintain the oldest heating system in the NYCHA portfolio is about 65 years old and it's still working beautifully today, or it was when I left in 2019. It is still working beautifully because the maintenance people at that particular facility took care of it.

And it goes that's facility on 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 because of its unacceptable living conditions including mold exposure, elevator outages, and unreliable heating and air conditioning, correct?

Yes, and without plans to fix it. They didn't have an approach. And what we did was build an approach in each of those areas. And as I said, despite the despite the corruption, despite the other problems, there were important successes. 7,000 fans on buildings and cleaning the vents, vents that had not been cleaned for 60 years. I don't even know if you could call them vents after 60 years. But NYCHA put together a team that did that job on budget, on time, and mold complaints went down 50 percent in those in those buildings. So they had if they're directed correctly, if they've used the analytics, if they have a plan, you can get things done.

I and I'm a supporter of housing authorities. My law firm, I grew up, my family law firm was the representative of the Islip Town Housing Authority and they did great work and they still continue to do great work. So I'm not saying housing authorities are bad. But you talk about we heard from the previous member and you talk about the amount of buildings under NYCHA's control and you mention there are, you know, people who manage some of the buildings know what they're doing, but there are other people, bad actors or corruption. I mean, those cases are true. I mean, there was a lot of people that pled to stealing money from NYCHA. So there was obviously corruption going on there. When the 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 buildings managers do a good job, some building managers don't do a good job. When do we hit that element where there's so many people living here, there's so much money being spent here, nothing seems to be getting better? Specific example, there was a in November of last year, there was an explosion by a there was a 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 known since 2018. When do situations like this all of a sudden say NYCHA as a whole with these building with the individual building operations, 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, the original plan for the oversight, which you had, was for five years. So much stuff was not addressed that has to continue. When is enough time enough time and we have to change what we're doing?

I don't know any precise answer to that, but there is 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. And the record shows that when we brought in the private sector, they took care of the maintenance and the operation worked more effectively.

Mr. Schwartz, my time's I'm sorry to cut you off, my time's out, but maybe we should get you get you back over there to manage things because it sounds like you have some good ideas.

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 five minutes.

Thank you, Mr. Chairman. I thank the witnesses for appearing as well. And I am concerned. Mr. Oberdorfer, the FY 2026 appropriations package that passed the House last week cut 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?

Thank you for that question. When looking at historical levels for the operating fund, usually it's around 85 to 90 percent or so prorated, meaning that for every dollar an agency should get, it gets about 85 cents to 90 dollars. 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.

Is that a very polite way of saying it's never been overfunded?

Yes.

And let's move to another point in this. How has the lack of funding impacted the agency's ability to provide services and maintain properties?

It's a great question. And I think I always think about it this way when I'm talking to folks about the challenges that come from the funding levels that have been seen by the public housing, both operating and capital fund. One, if you think about having an issue to your roof where you know you need to go in and fix that, but you don't 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 doesn't make the issue go away. In years' time, that's only going to increase the amount of cost to fix that issue. And I think we've 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. And then with capital fund needs for larger modernization projects, you know, we've 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. 2010 dollars are very different from 2026 dollars. And even though we have seen the number of units decline in the public housing program, we've never seen those costs keep pace. So again, we're 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 don't run into additional issues down the line.

Let's move to the Housing Choice Vouchers program, HCV. And has this program ever been overfunded?

So with the Housing Choice Voucher program, there are two accounts. There's the housing assistance payments, which is the rent that goes to tenants. Typically, we see that at close to full funding. But I would want to point out the second account, which is the Housing Choice Voucher administrative fee. That's the funding that agencies use to help folks get leased up, to help them manage their programs, make sure they're in compliance, make sure proper oversight is done. When looking at the admin fee, we have not seen full funding for that since 2003. And 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 determined agencies would need to run their voucher programs.

I find it quite interesting that the programs are underfunded and someone has concluded that the solution is to underfund. Programs need additional funds, don't get them, but then the solution becomes, well, let's cut. Let's cut the programs, let's cut the funds. I don't comprehend the logic. I yield back.

Gentleman yields. Gentleman from Nebraska, Mr. Flood, the chair of the Subcommittee on Housing and Insurance, is now recognized for five minutes.

Thank you, Mr. Chairman. First, I'd like to thank you for having this important hearing today. It's 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've seen evidence of rat infestations, and in Indianapolis and Omaha, we've heard reports of bedbug infestations. Mr. Haller, can you please speak to the pest and vermin infestations that you've seen in Indiana and explain why it took so long to resolve those issues?

So unfortunately, Indianapolis is one of the hotspots for bedbugs, you're correct there. They are very difficult to treat and very expensive, so that's one aspect of it. We have seen rodents as well. That tends to correspond with not having enough trash removal services or allowing trash compactor systems to get backed up and things like that. So again, I think when it comes to regular maintenance, making sure those very basic things are done right, including preventive treatments on a regular schedule, that's how you ultimately prevent those situations from getting out of control.

A second question, Mr. Haller. Your written testimony references the need for stronger inspection standards. However, we are 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?

Congressman, I would very much appreciate if you would share that information with us and we'd be happy to correspond with you about that.

Appreciate that. One common issue we've 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?

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. And I think we made great strides with HOPE VI and RAD in raising the 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 operation.

Mr. Schwartz, do you believe that property managers should have relevant experience and how important is that?

I think it's important. One of the recommendations we made at 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 too much for one person, especially at a size of NYCHA. The other thing we recommended is, 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 a specialist to help them as they look at the decision-making, whether they need an architect or an engineer, something to help them make an educated decision.

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 don't have much time here, but Mr. Schwartz, while each PHA is different, what are some of the best, briefly, best practices that PHAs can implement to quickly respond to residents' needs and abate hazards? And to the extent I only have 17 seconds left, I'd ask that you answer that question on the record with the help of committee staff. And with that, I yield back.

The gentleman yields. I would like to thank all witnesses for your testimony today. Without objection, all members will have five 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. This hearing is adjourned. [Gavel sounds.] And it's the chairman's birthday.

They heard that already, I think. [Video plays.]