Would private developers build affordable housing if there were no government subsidies? Rep. Mike Capuano (D-MA) and his colleagues explored that question and other topics during a House Financial Service Subcommittee hearing held last Thursday on private sector participation in affordable housing programs. The hearing covered a wide range of housing programs that help leverage private resources including HUD programs, such as the Rental Assistance Demonstration (RAD), Housing Choice Vouchers, and Public Housing, particularly the innovative Moving to Work program. Other government incentive programs that support affordable housing development, notably the Low Income Housing Tax Credit Program, were also the discussed.

The panel of witnesses, including Adrianne Todman, Executive Director of the District of Columbia Housing Authority, Brad Fennell of William C. Smith Company and Company, ‎Jim Evans of Quadel Consulting and Shelia Crowley of the National Low Income Housing Coalition, all responded to Rep. Capuano’s question with a resounding “no”. The witnesses clearly agreed that without some level of government investment, we would not have an available supply of decent housing for people of modest means. This begs another question: why has Congress continued to slash housing budgets year after year when the effect is to reduce the ability to leverage needed private funds?

All of the panelists echoed the ever growing need for affordable housing, as evidenced by countless studies. There was interest expressed by all in the RAD program as a way to leverage more private capital investment in public housing, using both FHA and the low income housing tax credit. Many of the Republican members of the Subcommittee indicated their support for the Moving to Work (“MTW”) program which enables public housing authorities to have more flexible program requirements which enable them to better partner with private entities to address local housing needs in a cost effective manner. While most of the panelists pointed to the success of MTW, even long time critic, Ms. Crowley, stated that she has seen that the ability to use funds fungibly, which is the center of the MTW idea, is important to helping public housing adapt more to the private market.

The one thing that was clear from the discussion: Congress is very interested in finding new ways for the private sector to play a larger role in providing the resources – both in terms of capital and private sector business models – to incentivize affordable housing investments. We have not heard the last of this topic... Legislation to follow?