[Senate Hearing 117-369]
[From the U.S. Government Publishing Office]
S. Hrg. 117-369
21st CENTURY COMMUNITIES: LOCAL LEADERS ON THE INFRASTRUCTURE NEEDS
FACING AMERICA'S STATES, CITIES, AND TOWNS
=======================================================================
HEARING
before the
COMMITTEE ON
BANKING,HOUSING,AND URBAN AFFAIRS
UNITED STATES SENATE
ONE HUNDRED SEVENTEENTH CONGRESS
FIRST SESSION
ON
EXAMINING INFRASTRUCTURE INVESTMENT AND ITS IMPACT ON AMERICA'S STATES,
CITIES, AND TOWNS
__________
JUNE 15, 2021
__________
Printed for the use of the Committee on Banking, Housing, and Urban
Affairs
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available at: https: //www.govinfo.gov /
______
U.S. GOVERNMENT PUBLISHING OFFICE
48-636 PDF WASHINGTON : 2022
COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS
SHERROD BROWN, Ohio, Chairman
JACK REED, Rhode Island PATRICK J. TOOMEY, Pennsylvania
ROBERT MENENDEZ, New Jersey RICHARD C. SHELBY, Alabama
JON TESTER, Montana MIKE CRAPO, Idaho
MARK R. WARNER, Virginia TIM SCOTT, South Carolina
ELIZABETH WARREN, Massachusetts MIKE ROUNDS, South Dakota
CHRIS VAN HOLLEN, Maryland THOM TILLIS, North Carolina
CATHERINE CORTEZ MASTO, Nevada JOHN KENNEDY, Louisiana
TINA SMITH, Minnesota BILL HAGERTY, Tennessee
KYRSTEN SINEMA, Arizona CYNTHIA LUMMIS, Wyoming
JON OSSOFF, Georgia JERRY MORAN, Kansas
RAPHAEL WARNOCK, Georgia KEVIN CRAMER, North Dakota
STEVE DAINES, Montana
Laura Swanson, Staff Director
Brad Grantz, Republican Staff Director
Elisha Tuku, Chief Counsel
Beth Cooper, Professional Staff Member
Megan Cheney, Professional Staff Member
Dan Sullivan, Republican Chief Counsel
Cameron Ricker, Chief Clerk
Shelvin Simmons, IT Director
Charles J. Moffat, Hearing Clerk
(ii)
C O N T E N T S
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TUESDAY, JUNE 15, 2021
Page
Opening statement of Chairman Brown.............................. 1
Prepared statement....................................... 29
Opening statements, comments, or prepared statements of:
Senator Toomey............................................... 3
Prepared statement....................................... 30
WITNESSES
Daniel Horrigan, Mayor, Akron, Ohio.............................. 7
Prepared statement........................................... 31
Responses to written questions of:
Senator Tester........................................... 48
Cyndy Andrus, Mayor, Bozeman, Montana............................ 8
Prepared statement........................................... 32
Responses to written questions of:
Senator Tester........................................... 49
Corey Woods, Mayor, Tempe, Arizona............................... 10
Prepared statement........................................... 34
Responses to written questions of:
Senator Tester........................................... 51
John Parsons, County Commissioner, Lancaster County, Pennsylvania 12
Prepared statement........................................... 36
Responses to written questions of:
Senator Tester........................................... 52
Brian Riedl, Senior Fellow, Manhattan Institute.................. 14
Prepared statement........................................... 37
(iii)
21st CENTURY COMMUNITIES: LOCAL LEADERS ON THE INFRASTRUCTURE NEEDS
FACING AMERICA'S STATES, CITIES, AND TOWNS
----------
TUESDAY, JUNE 15, 2021
U.S. Senate,
Committee on Banking, Housing, and Urban Affairs,
Washington, DC.
The Committee met at 10 a.m., remotely via Webex, Hon.
Sherrod Brown, Chairman of the Committee, presiding.
OPENING STATEMENT OF CHAIRMAN SHERROD BROWN
Chairman Brown. The Senate Committee on Banking, Housing,
and Urban Affairs will come to order. This hearing is in a
virtual format. A few reminders as you begin. Once you start
speaking there will be a slight delay before you are on the
screen. To minimize background noise, please click the Mute
button until it is your turn to speak or ask questions.
You should also have one box on your screens labeled
``Clock'' that will show time remaining. For witnesses, you
will have 5 minutes for opening statements. For Senators, the
5-minute clock still applies for your questions. At 30 second
remaining you will hear a bell right to remind you your time is
almost expired, ringing again when your time has expired.
If there is a technology issue, we will move to the next
witness or Senator until it is resolved.
To simplify the speaking order process, Senator Toomey and
I have agreed to go by seniority for this hearing. As most of
my Senate colleagues on this Committee know, Thursday will be
our first in-person hearing in more than a year, the first I
have had the privilege to chair. I know that all of us,
especially since the average age of a Senator is higher than
the average age of the typical American citizen, we know we
have all learned a lot about technology, some of us slower
learners than others over the last 15 months.
Today we are joined by local leaders who represent a cross-
section of this country. Whether it is an all-industrial city
or a college town, whether it is Indian country or Appalachia,
local leaders understand how proud people are of their
hometowns. They want their town to be successful. They want
their communities to grow and attract jobs. They do not want
families to be told to pick up and leave to find opportunity.
They do not want to lose workers forced out by rising housing
costs.
Mayors also know the many opportunities we can unleash if
we make the once-in-a-generation investment to rebuild our
country's infrastructure. They know what their communities
need. They know the transit project that would revitalize a
neglected neighborhood and bring new residents and customers to
Main Street. They know where there are shovel-ready projects
that would build new houses that workers can actually afford.
They know where lead pipes and lead paint still poison kinds in
America in the year 2021. They know the building trades workers
that are ready to get to work replacing those water lines,
retrofitting those homes.
Mayors understand how all these pieces fit together. Jobs
and infrastructure are inseparable. You cannot create the
former without the latter. We know when a business decides
where to build a new plant or office they look at the
infrastructure. They want to know if there is broadband, if
there are homes that workers can afford, if there is a bus or a
train that runs nearby.
When a young family decides to relocate for a new job they
think about how they will get to work, how long will the
commute be, whether the whole paycheck will get eaten up by
rent or the mortgage. These issues intersect, and while they
may look different in Bozeman and Akron and Tempe or Lancaster,
we know they are national problems. Mayors and City Councils
and County Commissioners can do a lot of good but they cannot
do it all on their own.
When we electrified the country in the beginning, but not
ending in the 1930s--and in Senator Tester's book I read that
in the '40s they were still electrifying parts of Montana--from
the Plains to Appalachia to the Deep South, as we electrified,
we didn't ask each individual mayor to come up with their own
grid or build his own dam.
When we built the interstate highway system we did not
expect every county in central Pennsylvania or southeast Ohio
to foot the bill for a stretch of road. We became the world's
largest economy, with the strongest middle class, because we
came together to invest in great national projects that joined
us all together as one country. We did not force workers and
their families to foot the bill.
The corporations that rely on our public goods to make
their vast growing profits should contribute to that upkeep.
Stock buybacks climb, corporate profits soar, yet America's
States and cities, from Akron to Bozeman to Tempe, America's
States and cities and towns scrape by each year, making hard
choices about their budgets. They do not want to short-change
public safety so they wait another year to replace aging buses.
They do not want to cut teacher salaries and lose talent, so
there is no money to turn dilapidated properties into
affordable homes in my Slavic village neighborhood in
Cleveland.
Over and over I hear the same thing from leaders in places
large and small, rural and urban. To attract good jobs we need
more resources. We need homes that workers can afford and ways
for them to get to work.
Today we will hear from my long-time friend, Mayor Dan
Horrigan, from Akron, a proud Midwestern city that has endured
decades of a national tax and trade policies, a policy that
encouraged its businesses to shut down production in Akron in
the Goodyear neighborhood, in Firestone Park in Akron, and move
good-paying union jobs abroad, where companies can pay lower
wages to exploit workers. That outsourcing does not just affect
individual workers and their families in Akron, as Mayor
Horrigan will tell you. It erodes the tax base, making it that
much harder for cities like Akron to build the infrastructure
that would draw new investment.
We will hear from Tempe, Arizona, mayor, Corey Woods, whose
work in a fast-growing city, working to tackle their affordable
housing shortage, showing the country how new transit
innovation is not just for New York and Philadelphia and
Washington. It is not just for big coastal cities. That
investment has the potential to spur growth in sunbelt cities
and across the country.
And we will hear from Mayor Cyndy Andrus of Bozeman. She
will tell you that high housing prices are not just a problem
in wealthy neighborhoods in big cities. Her fast-growing city's
housing shortage, as young people move there, as the university
thrives, and as people from the coast are relocating there,
that it is driving up home prices and leaving families without
options.
All these mayors and the local leaders I talk to in Ohio,
from Mansfield to Lima to Cleveland to Cincinnati will tell you
they have tried to make it on their own, because they have to,
not because they want to, not because they do not need
investment. They want to be part of a broad national project.
They want to build thriving, equitable, resilient communities.
It is time for all of our communities and the workers and their
families that call them home to share in our country's
prosperity. In part, it begins with us doing our job in
Washington, in extending that helping hand to these great
cities across our country.
Senator Toomey.
OPENING STATEMENT OF SENATOR PATRICK J. TOOMEY
Senator Toomey. Thank you, Mr. Chairman, and thank you to
our witnesses, especially my fellow Pennsylvanian, Josh Parsons
from Lancaster County.
At our last hearing about infrastructure, about a month
ago, I noted that a group of my Republican colleagues and I had
had a constructive discussion with President Biden about a
potential bipartisan infrastructure package. I also noted three
features of an infrastructure package that I think would have
very broad bipartisan support.
First, it should responsibly support real physical
infrastructure, that is, the platforms and systems that we
share and we use to move people, goods, and services throughout
the economy. That means things like roads and bridges and ports
and airports.
Second, a package cannot undo the 2017 tax reform that
helped create the best economy of my lifetime. Remember, before
COVID, we were experiencing an extraordinary economic boom. We
had the lowest unemployment rate in 50 years. We had more job
openings than people looking for jobs. We had a record-low
poverty rate, and wage growth across the board, with wages
growing fastest for the lowest-income earners. That is exactly
the economy we should all be wanting to get back to.
And third, we should not pay for infrastructure by
borrowing or printing billions of additional dollars. Now the
good news in this is we have hundreds of billions of unspent
COVID funds that Congress can repurpose. According to the
Congressional Budget Office, over $700 billion of the
Democrats' March spending bill will not be spent until after
2021.
Now, unfortunately, the Biden administration would not
agree to these sensible features, and they walked away from
negotiating with some of us, but I understand that there are
bipartisan discussions underway, and my hope is that an
agreement can be reached that is consistent with these
principles.
But the scope and size of the Administration's [inaudible]
at this point is simply untenable. I mean, take the scope of
the plan. The Administration wants to redefine what
infrastructure means in order to spend taxpayer dollars on
their Green New Deal agenda and other liberal policies.
Consider some specific examples. The Administration
proposed almost a quarter of a trillion dollars for housing.
Now set aside whether it is the responsibility of taxpayers to
buy and build everyone a home. Housing is not infrastructure.
Housing is housing. The Administration also proposed $100
billion in consumer rebates to purchase electric vehicles, and
$10 billion for the Civilian Climate Corps. This is not
infrastructure.
In addition to that, the $2.2 trillion size of the Biden
administration plan is wildly excessive. Even the plan spending
on the real physical infrastructure portion does not comport
with economic reality, given how much money Congress has spent
over the past year already.
Take transit spending, for example. The Administration
wants $85 billion of additional money over the next 5 years,
above and beyond what we would ordinarily spend over the next 5
years. Well, this does not take into account the tens of
billions of dollars the Federal Government already provided for
transit recently. This past March, our Democratic colleagues
passed a bill spending $30 billion on transit. They did that
after Congress provide more than $40 billion for transit in
response to COVID in 2020.
CBO estimates that of this $70 billion, $22 billion, almost
a third of COVID transit dollars, will not be spent until after
2021. Oh, and the $70 billion? That was on top of the $13
billion we annually spend. So if you did not have your
calculator out, that is a total of $83 billion that Congress
spent on transit over the course of 1 year. Amazingly enough,
that number exceed both the annual operating and capital costs
of every single transit agency in the U.S., combined, and now
they want $85 billion more over the next 5 years, on top of
what we ordinarily spend.
The Administration seems to have lost sight of the fact
that the Federal role in infrastructure spending has
historically been limited. State and local governments are
primarily responsible for funding infrastructure projects, for
the obvious reason that most infrastructure projects are
generally local or regional in nature. For example, a bus or a
light-rail station in San Francisco does not really do a lot
for people in Pittsburgh.
And States and local governments are currently awash with
cash. In the aggregate, State and local tax collections set an
all-time record in 2020. In addition to record revenues over
the course of 12 months, Congress sent more than $850 billion
to State and local governments. So States are now trying to
figure out ways to spend this huge windfall. California has a
budget surplus of over $75 billion, and at this point they may
just send out free money to Californians. My home State of
Pennsylvania is sitting on a $3 billion revenue surplus, plus
$7 billion in unused Federal money.
So still more wasteful spending by Congress is not what our
economy needs. It has already contributed to the harmful
inflation Americans are experiencing right now. Inflation is at
5 percent right now, the highest it has been in 13 years, and
this should not come as a surprise.
Earlier this year, President Clinton's Treasury Secretary,
Larry Summers, was warning us of the significant inflationary
risks of the excessive spending, and that was before our
Democratic colleagues passed the $1.9 trillion spending bill in
March. But his warning was ignored, and now our Democratic
colleague want to spend hundreds of billions, maybe over $1
trillion more.
Congress still has an opportunity to enact a sensible,
bipartisan infrastructure package, but that is only possible if
we support real physical infrastructure, that we pay for with
existing funds, without raising taxes or borrowing tens or
hundreds of billions more. We can meet our country's
infrastructure needs without jeopardizing our economic recovery
and putting future generations of Americans further in debt.
Thank you, Mr. Chairman.
Chairman Brown. Thank you very much, Senator Toomey.
I will introduce our first witness. Daniel Horrigan is the
mayor of Akron. He previously served as the Summit County Clerk
of Courts, as an Akron City Councilmember, as a teacher at St.
Vincent-St. Mary, LeBron James' alma mater, I might add, and at
Stow-Munroe Falls High School. Mayor Horrigan, thank you for
being here today and representing a legacy from America's
heartland.
I will turn to my colleague, Senator Tester, to introduce
the witness from his State.
Senator Tester. Thank you, Chairman Brown, and I want to
thank you both for your opening statements. I just want to say
a couple of things before I get to Cyndy Andrus, the mayor of
Bozeman, Montana.
Nobody likes wasteful spending, and I will tell you that if
you really believe the pacing threat to this country is China
then we better get serious about infrastructure. The bottom
line is that if you do not have places for people to live, you
do not have a manufacturing base, you do not have the ability
for businesses to expand, you do not have the ability for
people to recruit. Cyndy Andrus will probably tell you that in
Bozeman, Montana, there is no such thing as a first-time home
buyer, because, quite frankly, the cost of homes is so damn
high.
So I think we need to make an expenditure, a serious
expenditure, or let's just turn the keys over to the Xi, OK?
Just let him do it. The fact of the matter is we need to step
up. We need to do something that is meaningful, and housing and
transit is the right way to do it, and we need to have a
debate. If the money is wasteful spending, count me in. We will
pare it down. But the bottom line is the needs are huge across
this country, because we have been living on my grandparents'
and my parents' investment in infrastructure, and I am not
exactly young anymore.
As far as Cyndy Andrus goes, it is a pleasure to have her
in front of the Committee today. She is an incredible leader in
the State of Montana. She has been on the City Council of
Bozeman since 2010, and she has served as mayor of Bozeman for
the last 2 or 3 years--nod your head, Cyndy, if that is right.
The fact is that she has been a great leader for the Bozeman
region, which is, by the way, one of the highest, fastest-
growing areas in our State.
She has worked in the tourism industry for over 25 years,
and we all know how important tourism is, and the outdoor
economy is, for our great State of Montana. And she also serves
on the Board of Directors for the National League of Cities and
Towns. She is also the past chair of Montana Tourism Advisory
Council.
As mayor, when I visited with her about her willingness to
participate in this hearing, she pointed out that housing is an
incredibly complex yet critical challenge in rapidly growing
Bozeman, as it is, by the way, in other areas across this
country. And so to address this and other infrastructure
challenges it is important that we hear from people like Cyndy
Andrus, and other local officials, on the ground, about what is
working what is not working. Both of those are critically
important.
I look forward to this hearing, and I want to thank you,
Chairman Brown and Ranking Member Toomey, for having this
hearing, and welcome, Cyndy Andrus.
Chairman Brown. Thank you, Senator Tester.
Senator Sinema will introduce the mayor of Tempe. Senator
Sinema?
Senator Sinema. Thank you, Mr. Chairman, and thank you for
holding this hearing today. I am pleased to introduce my
friend, the Honorable Corey Woods, who serves as the mayor of
Tempe, Arizona. He is also the chief of staff at ASU
Preparatory Academy.
Mayor Woods served as a councilmember for the city of Tempe
from 2008 to 2016. He earned his B.A. from the University of
Michigan and his M.A. from Arizona State University's Mary Lou
Fulton College of Education.
The city of Tempe has prioritized a multilevel approach to
transit, helping make the city more livable and walkable, and
improving the quality of life for Tempe residents. Like many
cities in Arizona and across the country, they face challenges,
taking good, locally driven ideas, like the Tempe Streetcar,
and bringing them to life. I am proud to have worked with the
city to secure critical funding for the Streetcar, and the
Federal Government needs to continue to be a reliable, capable
partner that helps cities and towns across Arizona grow and
thrive.
I am so pleased to have an Arizona witness in today's
hearing, and I am committed to ensuring that the infrastructure
needs of local Arizona communities are met now and into the
future.
Thank you, Mr. Chairman, and welcome, Mayor Woods.
Chairman Brown. Thank you, Senator Sinema. I will introduce
the next two witnesses.
Commissioner Josh Parsons is the chairman of the Board of
County Commissioners in Lancaster County, Pennsylvania. He has
served on the County Commission since 2015, previously serving
as the Clerk of Courts, a prosecutor in Lancaster County
District Attorney's Office, and an infantry officer in the
Army.
Brian Riedl is a senior fellow at the Manhattan Institute,
focusing on budget, tax, and economic policy. He previously
served as chief economist to one of our colleagues, to my
colleague, Senator Rob Portman, as the lead research fellow on
Federal budget and spending policy, from 2001 to 2011.
Welcome, both Commissioner Parsons and Mr. Riedl.
You are now recognized for 5 minutes, Mayor Horrigan, to
begin.
STATEMENT DANIEL HORRIGAN, MAYOR, AKRON, OHIO
Mr. Horrigan. Good morning, Chairman Brown and Members of
the Banking, Housing, and Urban Affairs Committee. I am honored
to provide testimony to the Committee on the critical need for
a comprehensive approach and the understanding of housing and
transportation infrastructure, and how they are backbone for
our communities. I would ask the Committee to submit my
testimony in full for the record.
And I am privileged to serve as the Mayor of Akron, Ohio,
and represent roughly 200,000 people. We are the home of
Goodyear, Bridgestone-Firestone, Go-Jo Industries--and I would
venture a guess, if I looked around at all of your desks, I
would see bottles of Purell. They are made right here in Akron
and in Ohio, so thank you for the support--the University of
Akron, and so many other essential industries. Our people are
the resilient but burdened workers of the Industrial Heartland.
We are a legacy city, and we are in critical need of
infrastructure investment.
And as a mayor, I deal with the daily reality of how the
Federal Government impacts local citizens and the economic
impact Congress has on Americans.
Over the past few decades, Akron has experienced economic
downturns with major companies on the verge of leaving, a
pandemic that shut down our local businesses, and critical
housing issues, exacerbated by the Great Recession over a
decade ago, that we are still addressing. Communities of color
have been the hardest hit by these crises. And racial income
and wealth disparities are vicious and persistent in the city
of Akron, as they are across this country.
Housing is a basic human need, and this is something I
believe we can all agree on. In fact, by creating HUD, a
cabinet-level position, over 50 years ago, cemented this truism
to all of us. But housing is also a unique and complex network
of physical and financial structures, regulated and managed by
Federal, State, and local institutions. Local municipalities
have been faced with major problems such as foreclosures, an
aging housing stock, out-of-town landlords, banks not lending,
and insufficient Federal housing investments. Housing is
critical infrastructure.
All other infrastructure, whether it be water meters,
roads, electrical lines, broadband fiber, sewers, ultimately
connect to houses. Many of the most frequently discussed
housing topics covered by the national media are simply not
issues in a city like Akron. Our challenge is not displacement
of the poor, by the wealthy, or middle-class people being
priced out of the market and having to make long commutes into
the city. Our challenge is property values that are often too
low to allow capital stacks for new housing construction, or
home improvement loans for residents of modest means.
We need a Federal infrastructure framework that is geared
toward legacy cities like Akron, and we need programs that can
help leverage private capital for real estate investment and
development so that we can keep existing residents in their
homes, attract new residents to our city, and create markets
for retail and other small businesses that can serve and employ
our residents.
Finally, we cannot ask our citizens to return to work
without first ensuring they have a stable and healthy place to
return home. With regard to surface transportation and transit
options for workers, like housing, our challenges are not
necessarily those that you read about in the national media. My
constituents are not facing 2-hour-long commutes and
intolerable levels of traffic congestion. Our challenge,
instead, is maintaining the legacy infrastructure that was
built for a city that once had 30 percent more population than
it does today, with a limited tax base that is supported by
working-class residents.
Our residents have put real skin in the game, demonstrating
their willingness to invest in our infrastructure, by voting in
favor of a recent local income tax increase for roadway
improvements, but that does not come close to addressing all
our needed transportation investments. It does not eliminate
the need a Federal transportation program that focuses on
maintaining the roads that we already have, and providing more
assistance for alternatives to driving, such as public transit,
bike, and pedestrian improvements. It does not help electrify
our bus fleet, or replace our crumbling transit maintenance
facility, or expand the Bus Rapid Transit into neighborhoods
cutoff from the regional economy.
During this pandemic, the U.S. Congress have asked people
to contribute to their local economy by continuing to work,
keep paying their mortgages and taxes, and most did just that.
Further, as we emerge from the pandemic, we want those who lost
employment to come back to work. That requires stable housing
and the means to get to and from that job.
Finally, housing is the foundation of a healthy community.
I firmly believe that investing in housing infrastructure is
the absolute best way we can help our children thrive in
school, decrease neighborhood blight. Stronger and more stable
housing is key to Akron's future, for our country and our
future, and I would argue it is where all infrastructure begins
and ends.
Thank you for the opportunity to offer these thoughts, and
I look forward to the conversation today.
Chairman Brown. Thank you, Mayor Horrigan.
Mayor Andrus is recognized for 5 minutes.
STATEMENT OF CYNDY ANDRUS, MAYOR, BOZEMAN, MONTANA
Ms. Andrus. Good Morning, Chairman Brown, Ranking Member
Toomey, and Members of the Senate Banking Committee. It is an
honor to testify before you this morning about the
infrastructure challenges facing cities and towns across our
country. As you know, my name is Cyndy Andrus, and I am the
mayor of Bozeman, Montana, a city of about 50,000, located in
the southwest corner of the State, 90 miles north of
Yellowstone National Park. We are one of the fastest-growing
cities of our size in the United States.
To support that growth, we need infrastructure--water and
sewer infrastructure, robust, public transit options, and
faster broadband. But at the end of every sewer line, bus
route, and broadband fiber conduit is a home, a long-term, hard
capital asset. High-quality infrastructure must include
affordable housing, period.
I am here today to ask your help in solving our housing
crisis and to offer some thoughtful solutions to a growing
problem, not just in Bozeman but across the country.
In April of 2021, the median single-family home price in
Bozeman was $660,000, a 50 percent increase over 1 year.
Townhomes and apartments experienced a 22.4 percent median
price increase during that same time period.
Unfortunately, wages are not able to keep up pace with
these costs. Business owners cannot find employees. Third-,
fourth-, and fifth-generation Montanans are considering
uprooting their families, and young couples who have built
businesses and want to start a family no longer see a way to be
long-term members of our community.
I hear stories from business owners every week about top-
tier candidates turning down jobs because they cannot find an
affordable place to live. These are not just businesses looking
for workers making $15 an hour, but potential employees with
Ph.D.'s and salary offers between $75,000 and $100,000 per
year.
We have been working with community members and developers
to solve our affordable housing crisis for years now, using
every possible tool and incentive to get housing built. In
2018, we passed an inclusionary zoning ordinance. This led to
the construction of 17 affordable homes and more than $448,000
for our cash-in-lieu program. We have an additional 50 homes in
the pipeline, when in April this year the legislature outlawed
the tool, putting a stop to the progress we made tackling this
affordable housing crisis.
Still, we continue to find ways to incentivize affordable
housing construction, through reduced impact fees, reduced
minimum lot sizes, and reduced parking requirements. We have
also hired code experts to identify where our code
unintentionally drives up the price of a home through onerous
overregulation.
But it is not enough. The rising cost of land, labor, and
lumber force prices out of reach for many in our community. The
Federal Government needs to recognize that housing is a basic
building block of our community. Why build the infrastructure
if no one can afford to live in the community? We need housing
that everyone can afford, not just the wealthy.
We need your help. Here are a few ideas.
Provide more flexibility and access to tools like CDBG and
HOME to work for every community to construct more housing. A
one-size-fits-all solution does not work.
Provide resources to assist communities in simplifying
their development review process through hiring more staff and
auditing the entirety of their code.
Offer a program that offsets the cost of infrastructure,
construction, and improvement in exchange for denser
development.
In addition to housing, our public transit system in
Bozeman needs significant Federal investment. It is an
invaluable service providing over 300,000 rides per year.
Federal money could help expand routes and upgrade to a greener
fleet to align with our climate goals to reduce carbon
emissions.
I believe we are doing everything we can with the tools we
have to get affordable housing built in Bozeman. I do not
expect the Federal Government to build new housing from the
ground up, but I do have an expectation that you will do
something by providing tools to local governments to fill the
gaps that the private sector is not currently meeting.
On behalf of the 50,000 residents in Bozeman, I am asking
you to include housing in the American Jobs Plan and to fund it
as the long-term capital asset it is.
Thank you Chair Brown, Ranking Member Toomey, and Members
of the Banking Committee. I look forward to your questions.
Chairman Brown. Thank you, Mayor Andrus.
Mayor Woods is recognized for 5 minutes. Mayor Woods.
STATEMENT OF COREY WOODS, MAYOR, TEMPE, ARIZONA
Mr. Woods. Thank you. Good morning, Chairman Brown, Ranking
Member Toomey, and Members of the Committee. Thank you for
inviting me to be here today to speak with you about the
housing and transportation infrastructure needs of America's
cities. I am the Mayor of Tempe, Arizona, and the 2020 census
will likely say that about 200,000 residents live within our
borders. However, due to many residents and businesses that
call Tempe home, including the main campus of Arizona State
University, we have a daytime population that is 70 percent
greater than our census population. We are a land-locked
community, so we only have the option to buildup as we continue
to grow in size. With our focus on sustainable development,
density and public transportation are central to our city's
long-term planning.
The median income of Tempe residents is about $58,000, a
bit lower than the national average of $62,800. But the average
cost of a home is more than $270,000, nearly 25 percent higher
than the national average. In Tempe, this disparity between
income and housing costs results in 42 percent of renters and
24 percent of homeowners being considered cost-burdened, which
HUD defines as when a household pays more than 30 percent of
their annual gross income on housing expenses.
In addition to a dire need for more affordable housing for
middle-income workers, we also have struggled with the housing
needs of individuals experiencing homelessness. From 2015 to
2020, Tempe experienced an increase of over 900 percent in our
unsheltered population. Federal programs such as the Community
Development Block Grants, HOME Investment Partnership Programs,
and Emergency Solutions Grant funding have become essential
components in delivering housing options to our most vulnerable
populations.
In 2016, Valor on Eighth, a 50-unit affordable housing
complex that serves veterans and their families, opened to our
community. This project used CDBG to acquire the land and HOME
funds assisted with the construction of the facility. Low
Income Housing Tax Credits (LIHTC) were utilized to finance the
development with Project Based Vouchers in the facility also
allow for long-term affordability to be financially viable for
its residents.
And just last week, I was at the construction site of the
Nation's first 3D-printed home. The city of Tempe transferred
the property, originally purchased through CDBG funds, to
Habitat for Humanity for construction of a total of 16 homes.
Our city has invested heavily in affordable housing
initiatives, and through our Hometown for All initiative, we
negotiate voluntary contributions from developers to our
affordable housing fund and we dedicate an amount equal to half
of all permitting fees to these efforts.
Unfortunately, even with our city's own investments,
private partnerships, and creative use of Federal programs, we
do not come close to meeting the needs of our cost-burdened
residents nor addressing our extraordinary increase in
unsheltered individuals. Tempe has benefited greatly from a 55
percent increase in allocations of CDBG, HOME, and ESG over the
last 5 years, and this upward trajectory of Federal support is
critical for us to continue our collaboration with our private
and nonprofit partners. We simply cannot begin to meet the
housing needs of our residents without increased Federal
support.
Public transportation is the other key to Tempe's
sustainable growth strategy. Many of Tempe's future affordable
housing projects will be strategically located along the
existing, metro-area Light Rail system. We have also been very
fortunate to have broad support from our business community for
a proposed expansion of this system, known as the Tempe
Streetcar program. Businesses along the Streetcar corridor have
actually voluntary increased their self-assessments to meet the
project's funding needs.
We also work very closely with our private sector partners
to plan Tempe's future through thoughtful development that
includes affordable housing and public transportation to ensure
financial stability and access to economic opportunity for
Tempe residents. We invest a significant amount of Tempe tax
dollars into these efforts and are committed to expanding these
community resources. We are hopeful for an increased investment
from the Federal Government so they can become an even bigger
partner in the process of planning for Tempe's future.
I would be remiss if I did not note that our city is
managing through challenging financial times. The city's hotel
transaction privilege tax revenues are down 50 percent January
2021 as compared to January 2020, reflecting the steep decline
in travel and tourism to our region. Similarly, tax revenue
derived from restaurants and bars and amusements is down over
20 percent and 60 percent, respectively, over the same time
period.
The loss of special events, ASU attendance, workers coming
into the high-rises, conferences, and spring training has meant
that the city has fewer resources to provide services while our
residents and businesses are experiencing more needs.
Increased investments in infrastructure would provide the
city with an important tool to address the negative economic
effects of COVID-19 and continue to develop our community with
a sustainable and smart approach. We need continued and
increased Federal dollars to supplement our local investments
in affordable housing, public transit, infrastructure, and
programs to provide relief to the homeless, those at risk of
eviction, and other at-risk groups as our economy recovers and
local revenues get back on track.
I am so grateful for the time you have allowed me to speak
to you about Tempe's perspective and I look forward to
answering any questions you might have.
Chairman Brown. Thank you, Mayor Woods.
Commissioner Parsons, you are recognized for 5 minutes.
Welcome.
STATEMENT OF JOSH PARSONS, COUNTY COMMISSIONER, LANCASTER
COUNTY, PENNSYLVANIA
Mr. Parsons. Thank you, Chairman Brown, Ranking Member
Toomey, and other Members of the Committee. My name is Josh
Parsons and I am chairman of the Board of County Commissioners
in Lancaster County, Pennsylvania. I am a former prosecutor and
a former Army infantry officer.
The Board of County Commissioners is the seat of
legislative and executive powers in the county and has broad
authority over the county's budget, finances, taxes, debts, and
contracts.
At around 550,000 citizens, Lancaster County is the sixth
most populous of Pennsylvania's 67 counties. Although we are
best known for our Amish and Mennonite communities, like
Pennsylvania itself we are a diverse community with urban,
suburban, and rural residents. Lancaster County is made up of
60 municipalities: 1 city, 18 boroughs, and 41 townships. We
pride ourselves on fiscal responsibility and restraint.
Lancaster County Government has approximately the highest
general fund balance, which is like a personal savings account
for an individual, that it has ever had. This was achieved
through conservative budget management, not through raising
taxes. Lancaster County's current Board of Commissioners has
never raised taxes, and, in fact, our county taxes have not
been raised in nearly a decade, which is difficult to do as a
county in Pennsylvania.
Lancaster County has the third-lowest tax rate of the 67
counties in Pennsylvania, and the lowest of any large county.
Our bond rating has been rising and we have been good stewards
of our infrastructure. We are steadily working through a plan
to repair or replace all of our structurally deficient county
bridges.
Like everywhere else, the last year-and-a-half has been a
challenge for Lancaster County. We went into COVID with the
best economy we had seen in a generation. Our businesses were
thriving and our wages were rising for all groups and
demographics. The impact of the pandemic, and our Governor's
ensuing draconian lockdowns and refusal to address the economic
damage of the pandemic, did great harm to our economy.
However, I am very proud of our county's response to COVID.
Our county favored a middle course, where we addressed COVID
and the economic crisis. We pulled together as a community and
executed what was, in many ways, a model medical and economic
recovery plan in the Commonwealth of Pennsylvania.
The Federal CARES Act resources were instrumental in this
recovery. Lancaster County received approximately $95 million.
This was a huge amount of money for us. These funds were
disbursed to us very rapidly after the passage of the bill, and
arrived during the crisis. We, in turn, put the money quickly
to use for both medical and economic recovery plans across our
county. The CARES Act had sufficient flexibility in the
Treasury guidance that counties were able to use it in varied
and necessary ways.
As fiscal conservatives, we were, of course, concerned
about the cost of the CARES Act and the debt being accrued at
the national level to pay for it, but we recognized it was a
necessary response to the crisis because the Government had
effectively shut down the economy and prevented people from
earning a living. We felt a heavy responsibility to use this
money wisely to help our community.
Unlike the CARES Act, I do not think the so-called American
Rescue Plan was necessary. Under this act, Lancaster County is
slated to receive another $106 million. Again, this is a huge
amount of money for us. Moreover, every other county in
Pennsylvania, and many municipalities, are receiving
allocations. This money is arriving after the COVID crisis is
over, and now come proposals for even more money to be sent out
through an infrastructure plan.
At this point, rather than sending out more money, the
better solution would be to get Government fully out of the way
and let the economy come roaring back. As I talk to people
around my county, what I hear about is concern about costs
going up. Groceries, gas, lumber, everything costs more.
Inflation is a natural and predictable result of huge
amounts of money being pumped into the economy. Numbers from
May show inflation is up 5 percent. All this new money is
chasing the same amount of goods and services, including here
in Lancaster County.
Inflation hurts working-class people in Lancaster County
the worst because rising prices for things like groceries and
gas outpace wages. You can see and feel this happening already
around us. It also eats away at the value of any money put way
in a bank account for a rainy day.
So I would fervently ask that before you consider borrowing
more money from our grandchildren to hand out across the
country, just stop and take a pause. There is a huge amount of
money already circulating. For example, if you want to provide
for infrastructure, Congress could allow more flexibility for
counties and other municipalities in the use of the existing
American Rescue Plan funds. What need there still is could then
be addressed in a much more targeted way.
Please do not further bankrupt our country and take from
our yet unborn grandchildren without waiting to use the
existing massive amounts of money that have already been
distributed to States and local governments like ours.
Thank you.
Chairman Brown. Thank you, Commissioner Parsons.
Mr. Riedl is recognized for 5 minutes. Welcome.
STATEMENT OF BRIAN RIEDL, SENIOR FELLOW, MANHATTAN INSTITUTE
Mr. Riedl. Good morning, Chairman Brown, Ranking Member
Toomey, and Members of the Committee. Thank you for inviting me
to participate in today's hearing. My name is Brian Riedl. I am
a senior fellow at the Manhattan Institute, and I will offer
four principles for a responsible infrastructure proposal.
First, Congress should avoid piling on new taxes and debts.
The Federal budget outlook is already totally unsustainable,
and the American Jobs Plan would be the most expensive
nonemergency law in half a century. And it is coming at a time
when the national debt is already projected to double, from $17
trillion to $35 trillion, between 2019 and 2030.
And it gets worse. Washington is projected by CBO to run
$100 trillion in budget deficits over the next 30 years, and
that is assuming low interest rates. If interest rates exceed
the CBO baseline by 1 percentage point it would add $30
trillion in additional interest costs over three decades, just
a 1 percent rise in interest rates.
Even if this infrastructure spending is mostly paid for in
new taxes, it is still not fiscally responsible because we
already need nearly every progressive tax proposal just to pay
for the current programs we have. Let's pay for our current
commitments before piling on new ones.
Second, States should use the Federal windfalls they have
received. State and local governments are in the process of
receiving $350 billion for budget deficits that mostly no
longer exist. As Mr. Toomey mentioned, California is reporting
a $75 billion budget surplus. States are also holding
approximately $180 billion in unspent K-12 education grants
from earlier relief bills. That is $530 billion in short-term
funding for State and local governments that are mostly in
surplus.
The best use of a large, one-time windfall is to make a
large, one-time investment in infrastructure, which is mostly a
State and local function anyway. Washington can even use
matching funds, if necessary, to encourage States to reapply
this money.
Third, any additional Federal funding should be funded
within the current $61 trillion spending baseline over the
decade. Any Federal matching funds or truly national projects
can be funded this way. For example, trimming discretionary
spending by just 1.5 percent this year would save $500 billion
over the decade, that could be spent on infrastructure. Cutting
spending on the rich could save $1 trillion over the decade. If
infrastructure is truly a national priority, the responsible
offsets are already there within the budget.
Finally, while infrastructure can certainly use some
upgrades, lack of funding is not the main problem. Rather,
America's infrastructure is among the most expensive,
bureaucratic, and slowly built in the world. Consider that CBO
reports that Federal investments deliver average returns of
just 5 percent, versus 10 percent for private sector
investments. The per-mile cost of the interstate highway
construction quadrupled from 1960 through 1990, and has
quadrupled again since.
The Davis-Bacon Act raises wage costs by as much as 22
percent. Mandatory project labor agreements add costs too. Our
subway systems cost as much as quadruple the world average to
build.
Many delays are driven by the necessary but slow
Environmental Impact Statements and Historical Artifact
Reviews. Consider that environmental reviews commonly exceed
1,000 pages and average 7 years to complete, some taking more
than 17 years, and no ground can be broken until the project
has survived the legal gauntlet, including appeals by any
litigant. By comparison, these statements take 1 to 2 years in
Canada, and 3.5 years in the EU.
Let me wrap up by predicting that we may hear much today
about how investments will grow the economy and bring in enough
revenue to nearly pay for themselves. Yet the University of
Pennsylvania's Penn-Wharton Budget Model reports that
investments in the American Jobs Plan will, over the long run,
create no net jobs, reduce wages by 0.3 percent, reduce the
capital stock by 1.5 percent, and reduce the GDP by 0.3
percent. That is just the spending side. The taxes would make
the drag even larger, and Penn-Wharton cannot be dismissed as a
right-wing group.
Therefore, I recommend that Congress encourage State and
local governments to use their $500 billion in recent aid,
offset any Federal supplemental funding, and reform our
infrastructure policies to make them more effective and
efficient.
Thank you.
Chairman Brown. Thank you, Mr. Riedl. We will begin the
questions. Let's start with Mayor Horrigan. Some have
suggested, given the Federal funding Akron has received from
the American Rescue Plan Act that you are flush with cash. That
is the rhetoric. But, Mayor, what is the reality? Is there
anything extra or, ``left over,'' that can be used for the
housing and public transit investments that you have called for
in your community?
Mr. Horrigan. You know, I have heard those concerns about
the influx of cash. We are also dealing with a State
legislature that wants to even the score, kind of, and cut our
funding. You know, we have to run a balanced budget every year,
so we do not get a chance to borrow to be able to make sure
that we can do that.
You know, the other part of that is that, you know, it kind
of remind of an analogy too. When a lead-off hitter comes up at
the beginning of a baseball game and they hit a home run, the
crowd cheers and his teammates are congratulating him. But the
manager is not so sure yet, because he knows that there are
8\2/3\ innings left yet before they have to get through the
rest of the game.
It is a good start. I mean, that transportation
infrastructure, the Rescue Plan dollars have been a good start
to be able to address a lot of those needs. And I understand
the amounts are staggering in that way, but there is a
significant amount of investment that we have made, and quite
frankly, we need partners on these things too. And I agree
that, you know, some of those things that take a long time for
environmental review also look at, you know, some of the
mandates from the EPA. I mean, we are still working through our
consent decree, was a billion-dollar mandate from the EPA that
received no funding.
At the end of the day, we have to go out and fix these
things. You know, we can't wait necessarily for someone to come
along. But it really sure would be nice to have a partner in a
lot of these efforts too.
Chairman Brown. Mayor Horrigan, your city, many parts of
your city, in North Akron and Goodyear Heights and Firestone
Park and Kenmore look a lot like the neighborhood, parts of the
neighborhood that I live in, in Cleveland. The homes may look
affordable but too often banks will not make the small mortgage
loans that families need to buy or fix them up.
What would it mean for a young family and for the growth of
the community in Akron if there were funds available to do
repairs on these homes, existing homes, that could sell for
$50,000 or $60,000 or $80,000 or $90,000 here?
Mr. Horrigan. You know, 6 years ago I kind of started this
with a question to the community, and to me I think it is a
customer service question. And I asked them, ``Tell me what you
want,'' and they said, ``We want to be able to stay in our
neighborhoods. We want to be able to have a decent job. How are
we able to fix up homes?'' And even if we took the Rescue Plan
dollars now, we could probably fix up, depending on whether it
is a $20,000--not an addition but an improvement to a home.
We are also an age-friendly city, so if it is a young
family who wants to move in, we want to be able to give them,
you know, a house that is livable. You know, we have an aging
housing stock that most of it was built before 1970. In fact,
we did more construction, you know, during the '20s and '30s
than we did in the last 20 years. Fortunately, we have seen a
significant amount of construction in new housing. We have an
over-supply of bad housing, so if we can repair those houses
and help those young families, they are able to stay in Akron.
And we are trying to grow our population, and there are
each different markets to say what do different neighborhoods
want? Some want to stay and improve their homes. Maybe somebody
wants to downsize. Those are all the different markets that we
are trying to be in, and we are actually seeing a fairly robust
real estate market, where time on market has been cut in half
and the average price of a home has almost doubled in the last
6 years, because we have not been able to keep up with that
supply.
Chairman Brown. Well, we know in a city like yours, or a
city like Lancaster or York, Pennsylvania, that the housing
that is that old often has challenges with lead-based paint and
all of that too.
Mayor Woods, what would it mean for a city like Tempe if
you could count on Federal funding being available, count on it
available for new transit projects as soon as you could use it,
instead of waiting for years? Would that affect how quickly you
could get workers on the job?
Mr. Woods. Oh, absolutely. I mean, there is a huge
connection, Senator, between, you know, like housing and
transit equate to job growth, I mean, just as a connection. We
have a 28-mile-long light rail line that spans from Mesa to
Tempe to Phoenix, that opened in 2008. And since then over
35,000 jobs have been created within a half-mile of those rail
services. And if you add onto that, there has been over $11
billion in public and private investment in that corridor, and
5.5 million square feet of new education facilities.
So the connections between sort of transit investment and
quality of life and job growth are very clear, from our
perspective. So the reality is increased Federal funding and
more support for infrastructure would be huge to the city of
Tempe and huge for our entire region.
Chairman Brown. Thank you. Mayor Andrus, you and Mayor
Woods both lead cities that are fast growing, attracting new
residents, especially from the West Coast. That is creating a
housing challenge, as you mentioned. Would additional Federal
investments in affordable housing help you meet these
challenges?
You are on mute, Mayor.
Ms. Andrus. Oh, pardon me.
Chairman Brown. Go ahead.
Ms. Andrus. Sorry. Yes, absolutely. Additional dollars
would help us, whether that is additional dollars through new
programming or additional dollars to look at how we can access
programs that already exist and allow more flexibility in some
of those programs that already exist would be very helpful to
my community.
Chairman Brown. Thank you, Mayor.
Senator Toomey is recognized.
Senator Toomey. Thank you, Mr. Chairman. Commissioner
Parsons, first of all, thanks very much for joining us. I think
you mentioned that Lancaster County will receive about $106
million as a result of the bill passed in March by our
Democratic colleagues, and that $106 million is on top of
roughly $95 million Lancaster County got from the CARES Act. So
that is $201 million in just a little over a year.
Approximately, if you happen to know, off the top of your
head, about what percentage of the total Lancaster County
budget is that?
Mr. Parsons. Thank you, Senator Toomey. Our total budget
with State money is about $334 million. Our general fund
budget, which is mostly county money, is about $215 million. So
you are talking about basically the whole value of our general
fund budget. Our yearly total budget, it is, you know, about
two-thirds.
Senator Toomey. About two-thirds. Now Lancaster County, as
I understand it, was a county in which revenue was a little bit
below last year. Do you know about how much lost revenue you
had that could be reasonably attributed to COVID and the
lockdown?
Mr. Parsons. We are estimating right now somewhere around
$9 million for 2020.
Senator Toomey. Around $9 million. So the Federal
Government, between the CARES Act and this most recent bill,
sent, what, 25 times the lost revenue, approximately.
So let me ask you about another question. You know, if it
were the case that States and municipalities simply could not
borrow funds when needed, then I understand how people would
suggest, well, that is something the Federal Government can do
so we ought to do this.
But my understanding is across the credit rating spectrum,
large and small municipalities are like borrowing costs for
States and municipalities are actually significantly below
their pre-COVID levels, and municipal debt issuance has been
very strong. So far in 2021, State and local governments have
issued nearly $190 billion in bonds than the same period in
2019, and an ordinary year, pre-COVID, was only $152 billion.
So the combination of low interest rates and high volume
certainly does not suggest that municipalities cannot borrow.
Now I understand Lancaster County, awash with cash from the
Federal Government, so you do not need to issue debt, but if
you did, do you think the county would have a difficult time
issuing bonds or otherwise borrowing funds that were needed?
Mr. Parsons. I talk to a lot of my colleagues around the
State and I am not aware of any difficulties in borrowing for
capital projects. In Lancaster County, we are trying to pay
down our debt. We have paid down around $100 million of debt,
and we would like to continue that. But we do, from time to
time, still need to borrow new money or sometimes refinance
debt. We did that, I think, twice in the last year, once in
March, right around the beginning of the pandemic, and then
once in August, and we did not have any difficultly borrowing,
and I am not aware of any significant difficulty.
Senator Toomey. Thank you. Mr. Riedl, you made a point that
U.S. infrastructure tends to be more costly than our
international peers, which is kind of maddening for taxpayers
to think that they have to pay more than the going rate, so to
speak.
An example that is pretty amazing, New York's East Side
Access Project, which will connect the Long Island Railroad
with New York's Grand Central Station, is estimated to cost
$3.5 billion per mile, which is more than 7 times the
international average for this type of project, 7 times. Can
you help us understand why American infrastructure is so
expensive and inefficient?
Mr. Riedl. Thank you, Senator. There are multiple reasons.
If you are looking at the New York system, that is actually not
atypical. Four times the global average is the subway cost in
New York City. A lot of it, the reason that American
infrastructure is expensive, as I mentioned, the environmental
reviews can take 7, sometimes 17 years to finish. And then you
have to build defensively, because basically anybody can
challenge the environmental reviews and the historical
artifacts reviews. There are so many lawsuits that can delay
you for years. So you end up with defensive construction that
is more meant to avoid lawsuits than to necessarily build
efficiency.
You also have things like the Davis-Bacon Act, which I know
a lot of Senators [audio disruption]. You also simply have
contracting problems, where often Governments can contract with
the lowest bid, even with contractors who have a reputation for
going way over the cost. There are a lot of places to reform
infrastructure.
Senator Toomey. OK. Thank you, Mr. Chairman.
Chairman Brown. Thank you, Senator Toomey. Senator Van
Hollen I am not sure is here. He is not.
Chair Smith from Minnesota is recognized.
Senator Smith. Chair Brown, does my identification still
say Chair Smith?
Chairman Brown. No, it does not, but I thought I would say
it anyway, because of the excellent Subcommittee you chaired
last week. So I will not make it a habit, but thank you.
Senator Smith. Thank you so much, Chair Brown, and also
Ranking Member Toomey, and I want to thank very much all of our
guests today. It is great to hear from you.
I think that we have such a huge opportunity in this moment
to make significant strides forward on infrastructure. And I
approach this conversation as being a former chief of staff for
the mayor Minneapolis, and understanding what mayors go through
as they are trying to address real needs in a community. And I
would like to focus in on two of those if I can today.
The first is affordable housing, and if we have a moment I
would like to also talk a little bit about clean energy
infrastructure. These are two things that I think are essential
to include in the American Jobs Plan infrastructure package
that the Senate is working on.
So I suspect that as mayors you all are experiencing first-
hand the crisis of housing in our country, a complete mismatch
between supply and demand for housing, especially affordable
housing, and especially for renters. I am interested in hearing
what it is like in your cities. There is a shortage of housing
stock, and this, I think, is something that we can really
address, both rental housing as well as home ownership.
Now what I hear in Minnesota is that the cost of new
construction is a significant barrier to building, especially
in rural areas but also in small towns and big cities, and that
we are seeing sort of all sorts of challenges with supply chain
as we build out of COVID, literally, particularly lumber, for
example. By some estimates, the recent lumber shortage has
raised the price of building a new home by almost $40,000. And
then also there are issues--you know, there are just so many
issues.
So let me ask the mayors that are with us today, what
barriers do you see to building new housing in your community,
and how can Congress help you, as local leaders, address these
challenges? And maybe I will start with you, Mayor Woods.
Mr. Woods. Well, thank you, Chair Smith. I really respect
it. If Senator Brown called you Chair Smith, I am going to call
you Chair Smith as well.
I just wanted to say, so on our end we, actually, in the
city of Tempe, recognize, from a study that was conducted even
before I became mayor, that we need 11,000 additional units of
housing by the year 2040, just to keep pace with current
demand.
Some of the challenges, quite honestly, are not just simply
the cost of lumber and steel and everything else. It is the
fact that our State legislature has implemented policies such
as we are the only State in the entire country without tax
increment financing as a tool. Inclusionary zoning, rent
control, those are all practices that have been banned by our
State legislature.
But the reality is from being a mayor on the ground, and
you know this from being a former chief of staff to a mayor,
that, you know, we still have an obligation to provide housing
and solutions to our cities. I cannot just, as a mayor, blame
the State legislature and wash my hands of it. We have to
figure out other ways to get things done.
So we currently invested $1.2 million of city-owned funds
from our Hometown For All program, which we developed in a
proprietary fashion here, to clean up five different lots of
land along our light rail corridor for development. The purpose
of that is to make sure that when we are giving land to
developers they are actually getting clean dirt without the
remediation costs, which allows for them to truly deliver
affordable and workforce housing solutions. And we think what
we are currently doing, just as a city, we will get, in the
next couple of years, 325 units of new, affordable rental
housing, and 50 more affordable home ownership units as well.
But that, as we said, from the 11,000 units I first talked
about, that only scratches the surface. So we need additional
support from the Federal Government to make sure that everyone
can continue to live and work within our city, regardless of
income and regardless of occupation.
Senator Smith. Thank you. Thank you. Mayor Andrus, I am
sure you experience what mayors in my State experience, which
is that a lack of access to housing becomes a limiting factor
on economic growth, because companies cannot find people to
work if there are not places for them to live, and Bozeman is a
fast-growing community.
How can the Federal Government help communities like
Bozeman on housing?
Ms. Andrus. Well, thank you for the question. I agree that,
you know, we are one of the fastest-growing cities in the
entire country, and we are doing everything we can, reducing
impact fees and reducing minimum lot sizes and parking
requirements.
But I think where the Government can help is to look at the
existing programs and allow more flexibility and access in
those particular areas, particularly when you think about the
size of Bozeman, almost 50,000, we fall in the cracks there. We
are not big enough to be a city. We are too big to be
considered rural. So I think looking at those existing programs
and really thinking about flexibility there.
And I would also just add that preemption is becoming a
huge issue in Bozeman, and in Montana as well, with the
legislature taking away tools, as I mentioned in my testimony,
like inclusionary zoning.
We also have real short houses that do come on the market.
They are on for less than a month, so our turnover is quite
rapid.
Senator Smith. Right. Thank you very much, Chair Brown. I
will hold my clean energy questions for later, if we have time.
Chairman Brown. Thank you, Senator Smith. Senator Scott
from South Carolina is recognized for 5 minutes.
Senator Scott. Thank you, Mr. Chairman, for holding this
hearing. It is really important, certainly. And thank you to
the Ranking Member Toomey for participating in this process as
well. It is so important for us to uncover some of the ways
that we can accelerate some of the projects that are so
important to our local communities.
As many of you may recognize, I spent 13 years on the
county level, four times as the chairman of Charleston County
government, and I will say that the length of time that it
takes to go through the environmental process to see road
projects begin is incredibly important. I remember one
southeastern rail project that was submitted in 1992, and was
not approved until 2017.
We have projects in our State, projects that are really
important to the citizens of the low country, and especially
coastal South Carolina, projects like I-73, that is a really
important project for my State, and frankly, would create about
29,000 jobs, in addition to providing a hurricane evacuation
route for those folks living in Horry County. This is a product
of a 30-year planning process, with environmental permit
requests submitted back in 2011, and finally completed just a
few years ago.
The previous Administration sought to address the
longstanding issue of environmental requirements delaying
progress by codifying interagency requirements that would
hopefully bring it down to about a 2-year process, as opposed
to 5 years or 7 years, or as in the rail project that I just
named, 25 years.
I was incredibly disappointed to see that the Executive
order was revoked by the Biden administration, signaling a
return to a lengthy, overly detailed permitting and
environmental review process for new infrastructure projects.
Let me ask you, Mr. Parsons and Mr. Riedl, how can Congress
work to responsibly address the strenuous environmental
regulation times so that States and municipal governments can
reap the benefits of these much-needed projects in a timely
fashion?
Mr. Parsons. Well, thank you, Senator, for the question. I
agree with your comments. I was at the White House when
President Trump had a discussion with many of our colleagues
across the country at the county level about rolling back many
of those burdensome environmental regulations. So it is really,
as you mentioned, to add years and years to the process.
The other piece, I think, for our county, is there is a
huge amount of money that has already been allocated. So if we
can repurpose some of that money and allow it to be used for
actual infrastructure, like the most recent American Rescue
Plan funds, a lot of that we are not even going to be able to
use it on infrastructure unless Treasury changes some of the
guidance on that. So I think that is the two pieces I would add
to that.
Senator Scott. Thank you.
Mr. Riedl. If I could jump in on that too. One key
difference between the U.S. versus Canada and the EU is when
they have disputes with the environmental review process, with
local stakeholders, they are solved at the agency level very
quickly. In the United States, they are solved through lawsuits
that can take years.
So a very simple fix, which is to adjudicate at the agency
level instead of through lawsuits, could significantly cut down
the amount of time, while still making sure that stakeholders
have a voice.
Senator Scott. Thank you, Mr. Riedl. I will say that before
I left as chairman of County Council in Charleston County I
approved projects, new road projects, to take the truck traffic
through minority neighborhoods out of those neighborhoods,
through an access road. That road was literally just finished--
I think I approved that in 2007, I think it was--this year, 14
years later, and much of the delay, literally the environmental
studies that need to be done. No one is suggesting that they do
not need to be done, but when there are challenges or issues,
we need to find a way to accelerate that process so that we
will not see road projects double in price before we actually
get it done. The voters say yes to something on the local
level, but that they do not see for 14 years. That is just
ridiculous, and I really appreciate both of your comments.
And, Mr. Chairman, I will yield back the balance of my
time.
Chairman Brown. Thank you, Senator Scott. Senator Van
Hollen from Maryland is recognized for 5 minutes.
Senator Van Hollen. Thank you, Mr. Chairman, and to all the
witnesses, thank you for being here.
Mayor Woods, I have a question for you about the HOME
program, which, in most States, local jurisdictions, cities, is
the primary Federal tool available to local governments to
produce more affordable rental and owner-occupied housing. It
is a flexible program.
So my question to you is, President Biden has proposed
additional $35 billion for this program as part of his American
Jobs Plan, his Build Back Better initiative. Could you talk
about how you might use some of these funds to build and
produce more affordable housing?
Mr. Woods. Absolutely. Thank you, Senator Van Hollen. I
appreciate the question. We actually use HOME funds in the city
of Tempe to purchase units outright. Our Housing Department is
very active. We are a completely landlocked, 42-square-mile
community, and so all of the development, frankly, is infill.
It is redeveloping things that were already developed. So we
actually go out there and actively purchase land ourselves, and
purchase units with those HOME funds.
And what we really feel that this allows us to do is to
create permanent affordability, not a situation where we have
to do a deal, kind of in a one-off with the developer, and they
have the rates as sort of workforce for a couple of years, then
at some point the apartment complex gets flipped, and then the
rates simply become market rate or luxury rates. We really do
use those funds to ensure that the city can really be in the
driver seat, with our hands on the steering wheel at 10 and 2,
purchasing units outright, expanding the affordable and
workforce housing in our community, and most importantly,
making those units permanently affordable.
Senator Van Hollen. Thank you. Thank you, Mayor. Mayor
Horrigan, in addition to programs like the HOME program that
can help expand production of affordable housing, I think most
folks who have looked at this agree that we also need to expand
the HUD affordable housing voucher programs, choice vouchers.
In fact, Senator Todd Young from Indiana and I have introduced
bipartisan legislation to expand the use of vouchers for
families with young kids. We proposed 500,000 additional
vouchers over 5 years.
Could you comment on that? Is it your experience that there
is a shortage of affordable housing vouchers in your city?
Mr. Horrigan. Thank you, Senator Van Hollen. In fact, we
work very closing with our Public Housing Authority. In fact,
there is a significant shortage. There is probably a 19,000-
person waiting list at this particular point. In fact, 2 weeks
ago, we passed legislation locally that prevents landlords from
refusing a voucher during the pandemic. So we need to be able
to keep people in their homes.
One of the first things I did, and this was back 5 years
ago, we took a really good look at our housing market, and
quite frankly, we had issued about 15 building permits in 2014.
Last year, there were about 1,000 building permits issued, that
are in construction or are finished. And one of the things that
we tried to do, and I think it highlights what Mayor Woods just
said, you know, with the strong demand, we did not have any
demand. The housing market was coded and it was flatlined. So
we needed to incentivize the market, so we abated property
taxes for 15 years. That part has worked.
So we are seeing a lot of new housing being constructed,
but what are we doing with the aging housing stock? And I do
not care if it is my mom who needs to stay in her home and she
needs a ramp, and I do not care if it is a young family that
maybe needs a new furnace. That is the kind of flexibility and
I think partnership that we can all kind of agree on, to say
let's keep a person in their home. Let's let them use a voucher
to be able to stay there.
Because it kind of that critical piece. If you want to be
able to get to your job, you have got to have a way to get
there, and you have got to have somewhere to come back to. And
I think that has been our focus--how do we use all of those
different capital stacks and partnerships to keep people in
their homes, and I think growing our city once again.
Senator Van Hollen. I appreciate that, Mayor Horrigan. And,
you know, my view is that one of the shortcomings of the
proposed American Jobs Plan is that it does not create a major
additional source of funds for the affordable housing voucher
programs. The President's budget does a very good job, but we
will be working with the Chairman and Ranking Member and others
on this other piece. Thank you all very much.
Mr. Horrigan. Thank you.
Chairman Brown. Thank you, Senator Van Hollen. Senator
Daines from Montana, is recognized for 5 minutes.
Senator Daines. Chairman, thank you, as well as Ranking
Member Toomey, and thank you for holding this hearing today,
and I am especially proud to see my very own mayor of my
hometown, Mayor Andrus, here. I went from kindergarten through
college in Bozeman, and it is good to have our mayor in front
of the hearing.
I do not have to tell anyone here on the call, in this
virtual hearing, that Montana has been discovered. Just this
weekend, in fact, the New York Post wrote an article about the
out-of-control housing market in Montana, and the desire for
more and more people to move into our great State. We
understand why that is the case, but it creates additional
burden for our infrastructure. And that is nothing new for
Bozeman. We have seen this rapid growth now, over the last
decade, and frankly, during my lifetime, watching what is
happening in Bozeman, it has just accelerated to a level now
that we have never seen before.
As you are probably all aware, a recommendation to increase
the threshold of a metropolitan statistical area, called MSAs,
from 50,000 to 100,000 residents, was made to the Office of
Management and Budget earlier this spring. I penned my own
letter to OMB. I know we are working together here with Senator
Tester, expressing opposition to this proposal, and joining a
number of my colleagues in this effort as well.
Bozeman is one, and has been one of the fastest-growing
micropolitan in the country, and we just recently crossed that
50,000 threshold, so now we are called a metropolitan.
Mayor Andrus, could you talk for a moment about the impact
this change would have on the affected Montana communities, and
what it would mean in the future?
Ms. Andrus. Thank you, Senator. It is nice to see you, and
I appreciate the question. Yeah, I think that Bozeman has been
preparing to become a city of 50,000 for some time now, and
changing the goal posts, so to speak, in the middle of the game
would be a real game-changer.
Money that we get from the Federal Government, particularly
around transit, have a significant impact in my community, and
without that availability, all those options, we are not able
to access any of those options for housing--excuse me,
transportation.
So I believe that if that number were to change it would
have a severe impact on our opportunities to access funding as
we grow into a larger community.
Senator Daines. Thanks, Mayor, and I agree with you. I
think it is changing the rules kind of in the middle of that
game that is most concerning, as you all work your long-term
plans for growth in the future, and I appreciate that answer.
As many warn, as we know now, the unnecessary stimulus
package in March has led to inflation across the board,
regardless. Some of my colleague are pushing for more deficit
spending under the impression that the infrastructure somehow
will pay for itself.
Mr. Riedl, do you think more deficit spending on
infrastructure, like what has been requested by the President's
plan, is essentially costless?
Mr. Riedl. Thank you for the question. The data shows that
it certainly not costless. For Federal spending or tax cuts to
pay for themselves, you actually need to have a 500 percent
return on investment, because you then tax that 500 percent,
you back the 100 percent.
Instead of a 500 percent, the CBO reports that Federal
investments have a 5 percent return on investment, not 500
percent. That means that in terms of paying for themselves, you
would need 100 years to pay for one-fifth of the program in net
present value. That does not mean that these programs are
unworthy or that we should not do them, but they are not going
to pay for themselves.
I will add that that is just for typical investments. In
terms of the American Jobs Plan, the University of Pennsylvania
Penn-Wharton Budget Model concluded that the American Jobs Plan
spending provisions will create no net jobs, will reduce wages
by 0.3 percent over the long term, reduce the capital stock by
1.5 percent, and reduce the long-term GDP by 0.3 percent over
the long term. And again, Penn-Wharton is not a conservative
group.
So not only is investments, well, sometimes worthy, do not
pay for themselves, but specific investments in the American
Jobs Plan have actually been projected by Penn to reduce
economic growth.
Senator Daines. Thank you, Mr. Riedl. Chairman Brown, I am
going to return some time back to you. I know it is highly
unusual in a Senate hearing, but thank you for the time, and
Mayor Andrus, it is really good to have you here. Your
background there makes me homesick.
Chairman Brown. Thank you, Senator Daines.
The senior Senator from Montana is recognized for 5
minutes.
Senator Tester. Thank you, Chairman Brown, and I appreciate
Senator Daines giving me an extra 30 seconds, because Montana
is Montana, right? Now, Cindy, it is good to have you here. I
very much appreciate your commitment to the cause on housing.
From a Bozeman perspective, could you just tell me, number
one--and if you have already done this, I apologize--can you
tell me what kind of shortage you have in Bozeman? Is there a
number of units that you are short on, if you could tell me
that? And then tell me what we could do, at the Federal level,
to address the affordability challenge.
Now look, I have read some of the testimony and I have
heard what some folks have said here, and I may get to a point
where we ask that question, is affordable housing even
available. It is not in Montana. I do not think Montana is an
outlier. I think it is this way all over the country. But could
you tell me what you are short in Bozeman, and then what
Federal program do you look at and say, ``You know what? That
one is really doing some good things for housing.''
Ms. Andrus. Thank you, Senator Tester. We, over the last
year, have done a study to look at our housing inventory, and
we need approximately 6,000 homes to be constructed by 2025.
And at the pace we are going, that is a lot of housing to
provide.
What I believe can help, and I think where I have seen some
great impacts, are some of those programs that we have right
now. But what needs to happen is that there needs to be more
flexibility and accessibility in those programs, like CDBG and
HOME.
As you know, Bozeman is 50,000, and we fall, or have fallen
between the cracks. So, as I mentioned, we are not a large
city, we are not considered rural, and so access to those
dollars are difficult for us.
So as I mentioned before, we have issues around not only
housing, but when you do not have housing you have the
economics. People are having a hard time finding employees to
work. We have young people that are not able to stay in
Bozeman. We have seniors on fixed incomes who are having
difficulty here as well.
And as you may have seen in our paper, in the Bozeman
Chronicle last February, I am sure all of you may have seen
this, but there was a young gentleman, standing out on the
street corner with a sign that said, ``Local business owner,
wife pregnant, paid rent for 10 years. Please sell me a home.''
And so that is the kind of problem that we have here. He was
lucky enough to find a place, but it is a problem.
Senator Tester. So can you tell me--and I do not know if
you have had anybody do any projections, or just tell me from
regular old mayor's perspective, is this having a serious
negative impact on economic development to Bozeman?
Ms. Andrus. Well, absolutely, because when you have
companies that have jobs available, between $75,000 and
$100,000, for example, and you have top-tier candidates that
come in and are qualified for those jobs, but they cannot find
a house, they cannot find any affordable housing, even with a
job that pays that much. So that is one problem. You also have
those folks that are making $15 an hour, who are even having a
tougher time of finding housing. So it is definitely having an
impact.
Not only that, we have more tourists than we can count. We
are not able to have a local option sales tax. Even, as you
know, we have been trying for years and years and years. So
that continues to be a problem, as they have a huge impact on
our infrastructure here.
Senator Tester. Yeah. Just so people know, you said you
need 6,000 homes by 2030 in the Bozeman region. How many homes
do you have currently now? Is that 10 percent of what you have,
or 5 percent, or what?
Ms. Andrus. In terms of----
Senator Tester. Your total houses now. Do you know how many
you have now?
Ms. Andrus. I am sorry, Senator Tester, I do not have that
number right off the top of my head.
Senator Tester. That is OK. And I want to thank Senator
Daines and others who have gotten on the bill that I have to
stop the threshold doubling that was done by the ops
management, that was done, by the way, on the very last day of
the Trump administration. I do not know what you did to the
Trump administration to make them be so angry with you, but
they really put the boots to you on this one. And I was told 3
weeks ago that OMB was going to have a decision on this in a
month. Well, guess what? They have got 1 week. And hopefully
they are listening, and we are looking for them to take it back
to the 50,000 population threshold.
With that, Mr. Chairman, I will forego the 30 seconds that
Senator Daines gave me. We can give those to Warnock. Talk to
you later. Thank you.
Chairman Brown. Thank you, Senator Tester. Senator Ossoff
is recognized for 5 minutes, from Georgia.
Senator Ossoff. Thank you, Mr. Chairman, and thank you to
our panel.
Mayor Horrigan, like you have done in Akron, many cities
across Georgia are looking to make major investments in
infrastructure, including Columbus, Georgia, the Chattahoochee
River Valley region in Muscogee County. And these investments
in transit and transportation networks can better connect
communities and businesses, make it easier for folks to get to
work, attract more jobs and investments.
So as we build infrastructure legislation here in the
Senate, Mayor Horrigan, do you agree that regions of Georgia,
like the Chattahoochee River Valley, Columbus, Georgia, can
benefit, as have the community you represent, with major
investments in transit and transportation infrastructure?
Mr. Horrigan. Thank you, Senator. Absolutely. Actually,
Akron sits between Cleveland and Canton, and I appreciate
Senator Daines' and Mayor Andrus' efforts to not be on that
MSA. They tried to lump us in with Cleveland's MSA. They are a
distinct region, and, quite frankly, the market will figure
out, you know, when people need to get back and forth
someplace. We happen to be blessed with two Federal highways
that connect both of those cities. But getting people back
there and getting them, you know, on public transportation,
back and forth to where the jobs are so they can get back home,
is absolutely critical, you know, for them to be able to get to
that job and make sure that they can get back home too.
So those investments, they do pay off, because people are
able to get around better and they have a stable option to be
able to get to work and get back home.
Senator Ossoff. Thank you so much, Mayor. I appreciate
that.
Mayor Andrus, like in Bozeman, a lot of the economic
development and job growth we are seeing in Georgia is taking
place in smaller communities outside of the State capital.
Evans, Georgia, is the perfect illustration of such a town.
Evans is located just outside of Augusta, where we have Fort
Gordon, which hosts the U.S. Army Cyber Center for Excellence.
And from 2015 to 2020, Evans saw a 17 percent increase in its
employed population.
Growing cities and towns need to invest in infrastructure
to build more roads, connect people with accessible transit,
attract more jobs. How could a city like Evans, Georgia,
benefit from historic investments in infrastructure, based upon
your experience leading Bozeman, please?
Ms. Andrus. Well, thank you. I really appreciate the
question. Are you asking specifically about housing or transit?
Maybe you could clarify that for me.
Senator Ossoff. Your experience with investments in the
infrastructure that is right for your community.
Ms. Andrus. Oh, thank you. Well, I think that we have a
capital improvement plan that we look at for 5 years out, and
we look at where we need to make those investments and what
kinds of things are really going to help us open development
and open up areas for new building in Montana.
And I believe that some of those investments, some of the
programs that I mentioned that Federal Government offers
through the CDBG and the HOME program, if you look at making
them a little more flexible. We are not an entitlement
community, I am sure perhaps the community that you are
mentioning is not either, so we have to compete for funding
from some of our smaller communities in Montana. And if we were
able to have a little more flexibility in that program, a
little more funding in that program, I think it would help a
lot to aid in the infrastructure decisions that we are making.
Senator Ossoff. Thank you so much, Mayor Andrus. In my
remaining time, please, Mayor Woods, Tempe is making big
strides in clean energy, and congratulations to you for the
investments that you are making in renewable energy
infrastructure, which creates jobs and helps us sustain our
natural habitat.
In southwest Georgia, including areas of the State like
Albany, Valdosta, Bainbridge, and Thomasville, we are also
uniquely positioned to take advantage of opportunities in solar
energy production, given our location and infrastructure that
already exists there.
Can you please reflect, Mayor Woods, based on your
experience, on how southwest Georgia, given the assets that we
have, might benefit economically from increased investment in
clean energy, as you have made such investments in and around
Tempe?
Mr. Woods. Absolutely, Senator Ossoff. Thank you for the
question. So energy use accounts for about 70 percent of our
municipal carbon emissions, and about 50 percent of our
community investments. We have actually six municipal buildings
here in the city of Tempe with solar on them right now, to
minimize municipal carbon emissions.
And so one of our big priorities is working on these sort
of resiliency hubs with our local electric companies--Arizona
Public Service, Salt River Project. These hubs really do
demonstrate how solar and battery storage can be used in the
case of extreme heat and temperatures. And right now, today is
an 118-degree day, right here in Arizona. So the fact that we
are studying the use of these resiliency hubs is huge, and
really will help to protect us when there are issues when it
comes to extreme heat.
So funding that really helps to continue to prioritize this
kind of work, when it comes to the solar [audio disruption]
environmental sustainability and reducing emissions is huge for
the city of Tempe and for the entire region.
Senator Ossoff. Thank you, Mayor Woods. Thank you, Mr.
Chairman.
Chairman Brown. Thank you, Senator Ossoff. I believe no one
else is in the queue for questions?
Senator Toomey, I do not know if you have anything else. I
think that you are not in the queue.
So thank you. Thanks to all of you, all five of you, for
being here today. We have heard from mayors across the country
that they and their citizens are doing all they can to serve
their communities, to create places where families and
communities and businesses can flourish.
We have heard from these local officials that they are
doing all they can but that they need help from the Federal
Government to build the infrastructure of the 21st century, and
decidedly that includes housing and transit in that
infrastructure. It does not matter if you are in the industrial
Midwest or surrounded by the Rocky Mountains or a booming
community in the Southwest, Federal help has played in the past
and needs to play an essential role in supporting communities
in the private sector in allowing our workers and businesses to
compete around the world.
My friend, Jon Tester, I think summed it up when he said we
can either get serious about this or we can turn the keys over
to China.
Thanks to our witnesses. For Senators who wish to submit
questions for the record, these questions are due by the close
of business Tuesday, June 22. For our witnesses, please submit
your responses to those questions for the record 45 days from
today.
Thank you all for being here. The meeting is adjourned.
[Whereupon, at 11:26 a.m., the hearing was adjourned.]
[Prepared statements and responses to written questions
supplied for the record follow:]
PREPARED STATEMENT OF CHAIRMAN SHERROD BROWN
Today we're joined by local leaders who represent a cross section
of the country.
Whether it's an old industrial city or a college town, whether it's
Indian Country or Appalachia, local leaders understand how proud people
are of their hometowns.
They want their town to be successful, they want their communities
to grow and attract jobs. They don't want families to be told to pick
up and leave to find better opportunities. They don't want to lose
workers forced out by rising housing costs.
And Mayors also know the many opportunities we can unleash, if we
make a once-in-a-generation investment to rebuild our country's
infrastructure.
They know what their communities need: They know the transit
project that would revitalize a neglected neighborhood and bring new
residents and customers to Main Street.
They know where there are shovel-ready projects that would build
new houses workers can actually afford.
They know where lead pipes and lead paint are still poisoning kids
today, in America in the year 2021--and they know the Building Trades
workers that are ready to get to work replacing those water lines and
retrofitting those homes.
And mayors understand how all of these pieces fit together. Jobs
and infrastructure are inseparable--you can't create the former without
the latter.
We know when a business decides where to build a new plant or
office, they look at the infrastructure--they want to know if there is
broadband, if there are homes their workers can afford, if there is a
bus or a train that runs nearby.
When a young family is deciding whether to relocate for a new job,
they think about how they'll get to work, how long will the commute be,
whether their whole paycheck will get eaten up by rent or the mortgage.
These issues all intersect--and while they may look different in
Bozeman and Akron and Tempe, we know they are national problems. Mayors
and city councils and county commissions can do a lot of good--but they
can't do it all on their own.
When we electrified the country--from the plains to Appalachia to
the Deep South--we didn't ask each individual mayor to come up with
their own grid or build their own dam.
When we built the interstate highway system, we didn't expect every
county to foot the bill for its stretch of road.
We became the world's largest economy, with the strongest middle
class, because we came together to invest in great national projects
that joined us all together as one country.
And we did not force workers and their families to foot the bill.
The corporations that rely on our public goods to make their vast,
growing profits should contribute to the upkeep.
While stock buybacks climb and corporate profits soar, Americans'
States, cities, and towns scrape by each year, making hard choices
about their budgets.
They don't want to shortchange public safety, so they wait another
year to replace aging buses. They don't want to cut teacher salaries
and lose talent, so there's no money to turn dilapidated properties
into affordable homes in their neighborhoods.
Over and over, I hear the same thing from leaders in places large
and small, rural and urban: to attract good jobs, they need more
resources.
They need homes their workers can afford, and ways for them to get
to work.
Today, we'll hear from Mayor Daniel Horrigan, from Akron, Ohio--a
proud Midwestern city that has endured decades of a tax and trade
policy that encouraged its businesses to shut down production in Ohio,
and move good-paying union jobs abroad, where companies can pay lower
wages and exploit workers.
That outsourcing doesn't just affect individual workers and their
families--as Mayor Horrigan will tell you, it erodes the tax base,
making it that much harder for cities to build the infrastructure that
would draw in new investment.
We'll also hear from Tempe, Arizona, Mayor Corey Woods, who is
working to tackle their affordable housing shortage and showing the
country how new transit innovation isn't just for big coastal cities--
that investment has the potential to spur growth in Sunbelt cities, and
across the country.
And we'll hear from Mayor Cyndy Andrus of Bozeman, Montana. She'll
tell you that high housing prices aren't just a problem in wealthy
neighborhoods in big cities--her city's housing shortage is driving up
home prices and leaving families without options.
All of these mayors, and the local leaders I talk to in Ohio, will
tell you they've tried to make it on their own because they have to--
not because they want to, not because they don't need investment.
They want to be part of a broad national project. They want to
build thriving, equitable and resilient communities.
It's time for all our communities, and the workers and the families
that call them home, to share in our country's prosperity.
______
PREPARED STATEMENT OF SENATOR PATRICK J. TOOMEY
Thank you, Mr. Chairman. And thank you to our witnesses, especially
my fellow Pennsylvanian, Josh Parsons from Lancaster County.
Our last hearing about infrastructure was almost a month ago. At
that time, I noted that a group of my Republican colleagues and I had a
constructive discussion with President Biden about a potential
bipartisan infrastructure package. I also noted three features of an
infrastructure package that should have broad, bipartisan support.
First, it should responsibly support real physical infrastructure.
That is, the platforms and systems we share and use to move people,
goods, and services. That means things like roads, bridges, ports, and
airports.
Second, a package cannot undo the 2017 tax reforms that helped
create the best economy of my lifetime. Before COVID, we were
experiencing an economic boom. We had the lowest unemployment rate in
50 years, more jobs than people looking for work, a record low poverty
rate, and wage growth across the board with wages growing fastest for
the lowest income earners. That's the economy we should work to get
back to.
Third, we should not pay for infrastructure by borrowing billions
of more dollars. The good news is we have hundreds of billions of
unspent COVID funds that Congress can repurpose. According to CBO, over
$700 billion of the Democrats' March spending bill won't be spent until
after 2021.
Unfortunately, the Biden administration would not agree to these
sensible features and walked away from negotiations with us. I
understand there are bipartisan discussions under way and my hope is
that an agreement can be reached that's consistent with these features.
The scope and size of the Administration's infrastructure plan is
particularly untenable. Take the scope of the plan. The Administration
wants to redefine what infrastructure means in order to spend taxpayer
dollars on their Green New Deal agenda and other liberal policies.
Let's consider some examples. The Administration proposed almost a
quarter-of-a trillion dollars for housing. Setting aside the issue of
whether it's the responsibility of Federal taxpayers to buy and build
everyone a home, housing is not infrastructure. Housing is housing. The
Administration also proposed $100 billion in consumer rebates to
purchase electric vehicles, and $10 billion for a Civilian Climate
Corps.
In addition, the $2.2 trillion size of the Biden administration's
plan is wildly excessive. Even the plan's spending on real physical
infrastructure, does not comport with economic reality, given how much
money Congress has spent over the past year.
Take transit spending, for example. The Administration wants $85
billion dollars for transit. This figure fails to account for the
billions of dollars the Federal Government has recently provided for
transit.
In March, Democrats spent $30 billion dollars on transit. Democrats
did that after Congress provided more than $40 billion dollars for
transit in response to COVID in 2020. CBO estimates that of this $70
billion, $22 billion--almost one-third of COVID transit dollars--won't
be spent until after 2021. And this $70 billion was on top of the $13
billion we annually spend. That's a total of $83 billion dollars that
Congress spent on transit over the course of 1 year. Amazingly, that
number exceeds both the annual operating and capital costs of all the
transit agencies in the U.S combined.
The Biden administration seems to have lost sight of the fact that
the Federal role in infrastructure spending has historically been
limited. States and local governments are primarily responsible for
funding infrastructure projects--for the obvious reason that
infrastructure projects are generally local or regional in nature. For
example, bus and rail stations built in San Francisco don't do a lot
for people in Pittsburgh.
And States and local governments are currently awash with cash. In
the aggregate, State and local tax collections set a new record in
2020. In addition to record revenues, over the course of 12 months,
Congress sent more than $850 billion to States and local governments.
States are now looking for ways to spend this windfall. For
example, California has a budget surplus of over $75 billion that it
may use to send out ``free'' money to Californians. And my home State
of Pennsylvania is sitting on a $3 billion revenue surplus, plus $7
billion in unused Federal aid.
More wasteful spending by Congress is not what our economy needs.
It's already contributed to the harmful inflation Americans are
experiencing now. Inflation is at 5 percent--the highest it's been in
13 years.
None of this should come as a surprise. Earlier this year President
Clinton's Treasury Secretary Larry Summers was warning us of the
significant inflationary risks of excess spending. And that warning was
before the Democrats' March $1.9 trillion spending bill. But Democrats
ignored his warning. And now Democrats want to spend hundreds of
billions more.
Congress still has an opportunity to enact a sensible, bipartisan
infrastructure package. But that's only possible if we support real
physical infrastructure that we pay for with existing funds--without
raising taxes or borrowing billions. We can meet our country's
infrastructure needs without jeopardizing our economic recovery and
putting future generations of Americans further into debt.
______
PREPARED STATEMENT OF DANIEL HORRIGAN
Mayor, Akron, Ohio
June 15, 2021
Chairman Brown and Members of the Banking, Housing, and Urban
Affairs Committee, I am honored to provide testimony to the Committee
on the critical need for a comprehensive approach and understanding of
housing and transportation infrastructure, and how they are the
backbone for our communities. I would ask the Committee to submit my
testimony in full for the record. I am privileged to serve as the Mayor
of Akron, Ohio, and represent roughly 200,000 people. We are the home
of Goodyear, Bridgestone-Firestone, Go-Jo Industries, the makers of
Purell, the University of Akron, and so many other essential
industries. Our people are the resilient but burdened workers of the
Industrial Heartland. We are a legacy city, and we are in critical need
of infrastructure investment.
As Mayor, I deal with the daily reality of how the Federal
Government impacts local citizens and the economic impact Congress has
on Americans. Over the past few decades, Akron has experienced economic
downturns with major companies on the verge of leaving, a pandemic that
shut down our local businesses, and critical housing issues,
exacerbated by the Great Recession over a decade ago, that we are still
addressing. Communities of color have been the hardest hit by these
crises. And racial income and wealth disparities are vicious and
persistent in Akron, as they are across this country.
Housing is a basic human need. This is something I believe we can
all agree on. In fact, by creating HUD, a cabinet level position, over
50 years ago, cemented this truism to all of us. However, ``housing''
is more than what we see as our home. Housing is a unique and complex
network of physical and financial structures--regulated and managed by
Federal, State, and local institutions. Local municipalities have been
faced with major problems such as foreclosures, an aging housing stock,
out-of-town landlords, banks not lending, and insufficient Federal
housing investments. Housing is critical infrastructure. All other
infrastructure--water meters, roads, electrical lines, broadband fiber,
sewers ultimately connect to houses.
Many of the most-frequently discussed housing topics covered by the
national media are simply not issues in cities like Akron. Our
challenge is not displacement of the poor by the wealthy, or middle-
class people being priced out of the market and having to make long
commutes into the city. Our challenge is property values that are often
too low, to allow capital stacks for new housing construction, or home
improvement loans for residents of modest means.
We need a Federal infrastructure framework that is geared toward
legacy cities like Akron. We need programs that can help leverage
private capital for real estate development so that we can keep
existing residents in their homes, attract new residents to our city,
and create markets for retail and other small businesses that can serve
and employ our residents. Finally, we cannot ask our citizens to return
to work without first ensuring they have a stable and healthy place to
return HOME.
With regard to surface transportation and transit options for
workers, like with housing, our challenges are not necessarily those
that you read about in the national media. My constituents are not
facing 2-hour long commutes and intolerable levels of traffic
congestion. Our challenge, instead, is maintaining the legacy
infrastructure that was built for a city that once had 30 percent more
population than it has today, with a limited tax base that is supported
by working-class residents. Our residents have put real skin in the
game, demonstrating their willingness to invest in our infrastructure,
by voting in favor of a recent local income tax increase for roadway
improvements, but that doesn't come close to addressing all our needed
transportation investments. It doesn't eliminate the need a Federal
transportation program that focuses on maintaining the roads that we
already have, and providing more assistance for alternatives to
driving, such as public transit and bike and pedestrian improvements.
It doesn't help electrify our bus fleet, or replace our crumbling
transit maintenance facility, or expand Bus Rapid Transit into
neighborhoods cut off from the regional economy.
During this pandemic, you--the United States Congress--have asked
people to contribute to their local economy by continuing to work, keep
paying their mortgage and taxes, and most did just that. Further, as we
emerge from the pandemic, we want those who lost employment to come
back to work. That requires stable housing and the means to get to and
from that job. Finally, housing is the foundation of a healthy
community. I firmly believe that investing in housing infrastructure is
the absolute best way we can help our children thrive in school,
decrease neighborhood blight and violence, and decrease economic
disparities among our Black residents. Stronger and more stable housing
is key to Akron's future, and for our country's future, and I would
argue it's where ALL infrastructure begins and ends.
Thank you for the opportunity to offer these thoughts, and I look
forward to the conversation today.
______
PREPARED STATEMENT OF CYNDY ANDRUS
Mayor, Bozeman, Montana
June 15, 2021
Good Morning, Chairman Brown, Ranking Member Toomey, and Members of
the Senate Banking Committee. It is an honor to testify before you this
morning about the infrastructure challenges facing cities and towns
across our country. I am Mayor Cyndy Andrus. I am the mayor of Bozeman,
Montana, one of the fastest-growing cities in the country. Bozeman is a
vibrant community with the State's land grant university, Montana
State; a thriving tech sector; a booming tourism economy; and a
pristine outdoor environment neighboring America's first National
Park--Yellowstone. These assets have drawn people from all over the
country and the world to Bozeman and our great State of Montana.
To support such growth, Bozeman certainly needs improved water
infrastructure, faster broadband, and more robust public transit
options. But at the end of every sewer line, bus route, and broadband
fiber conduit is a home--a longterm, hard capital asset. That home must
be affordable and occupied for these investments to provide a return to
the taxpayer. Clearly, in Bozeman and so many communities like ours,
high-quality infrastructure must include affordable housing. Period.
Housing affordability and lack of housing stock are not just
coastal, urban issues. As I hope to illustrate in my testimony, housing
affordability challenges impact communities of all sizes across the
country.
As reported in the Bozeman Daily Chronicle, the median home price
in Bozeman was $660,000 in April 2021. \1\ That reflects a 50 percent
increase in the median price for a single-family home in 1 year.
Similarly, townhomes and apartments in Bozeman experienced a 22.4
percent median price increase from April 2020 to April 2021. \2\
Unsurprisingly, it is impossible for wages in Gallatin County to keep
pace with this explosive growth in housing costs. The divergence
between wages and home prices affects everyone. Business owners cannot
find employees; thus, they must reduce hours or turn down clients.
Third-, fourth-, and fifth-generation Montanans have to consider
uprooting their families after contributing for decades to what makes
Montana special. Young couples who have built businesses and want to
raise children in Bozeman no longer see a way to be long-term members
of our community.
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\1\ https://www.bozemandailychronicle.com/news/city/as-housing-
costs-skyrocket-bozemans-workers-andemployers-feel-the-pinch/article--
5ad77d72-8578-5134-b5fe-b5ea0b1df9d8.html
\2\ https://www.bozemandailychronicle.com/news/economy/housing-
prices-in-bozeman-decline-frommarch-to-april-but-theyre-still-way-up-
from/article--364d1f82-1fa9-54d2-86a2-6a649b8379c7.html#
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Every week, I hear from business owners in our community who have
top tier candidates turn down job offers because home prices are out of
control. The people who cannot afford a home in Bozeman are not just
hourly workers making $15/hour, but also potential employees with
Ph.D.'s and salary offers between $75,000 and $100,000 per year. Rising
housing prices and an unemployment rate of 3 percent \3\ create the
perfect storm where businesses in our community cannot attract the
talent they need, nor is there a local talent pool actively looking for
jobs. Construction companies and developers cannot even find the
workforce to build workforce housing.
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\3\ https://fred.stlouisfed.org/series/MTGALL1URN
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Without an affordable place to live, residents of Bozeman cannot
participate in our community. They cannot enjoy our trails, they cannot
send their kids to our top-notch local schools, and they cannot
contribute to our economy as consumers, employees, or employers.
Now, as Senators Tester and Daines know, Montanans do not just sit
around and complain about our problems. We find solutions. After
consulting with community members including low-income families,
business owners, and developers, the City of Bozeman adopted an
inclusionary zoning ordinance in 2018. The ordinance required projects
with ten or more single family homes to sell 10 percent of the homes to
be affordable at 70 percent of AMI or pay cash-in-lieu to the City's
community housing fund. The regulation led to the construction of 17
affordable homes, more than $448,000 for our cash-in-lieu program, and
roughly 50 more homes were in the development review process. \4\ Not a
bad start to a program that was just over 2 years old in a city of
about 50,000 with construction timelines averaging 18-24 months.
However, in April, our legislature outlawed this tool to get
firefighters, teachers, and nurses--the backbone of our community--into
homes at a reasonable price point. They put a stop to the progress we
had made combatting this crisis.
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\4\ https://community-housing-hub-bozeman.hub.arcgis.com/
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Even with inclusionary zoning no longer an option, Bozeman has
continued to find ways to incentivize affordable housing construction
through reduced impact fees, reduced minimum lot sizes, and reduced
parking requirements. In addition, Bozeman no longer approves projects
using the City's most restrictive single-family zoning designation, RS.
Further, the City's minimum development density requirements for
projects encourage dense, compact development. Finally, the City has
hired development code and urban planning code experts to identify
where Bozeman's code unintentionally drives up the price of a home
through onerous overregulation.
Despite all of these efforts, it still is not enough. The rising
cost of land, labor, and lumber force prices for many homes out of
reach in our community. The City will continue to pursue ways we can
ease the burden of regulations and facilitate denser development.
However, we are asking for help.
The Federal Government needs to recognize that housing goes hand in
hand with streets, sewers, and bridges. Housing is the basic building
block of a community. Why build all that infrastructure if no one can
afford to live in the community?
We need housing that the community as a whole can afford, not just
the wealthy. Many Senators on this Committee have seen what happens to
communities when the middle tier of housing is hollowed out, and only
the wealthy can afford to live there. It is not pretty.
Luckily, Congress can help and there is no need to create new
programs. Nonentitlement communities like Bozeman must compete for
Federal funds through existing programs like the Community Development
Block Grant program, the HOME program, and the Housing Trust Fund from
within the State's allocation. Thus, competition for these limited
funds pits Bozeman against much smaller nonentitlement communities in
Montana, all with limited resources to construct more housing. And our
rural neighbors in places like Three Forks and Wilsall, Montana, need
similar investments for the critical rural housing programs at USDA
Rural Development. Finding solutions that only work for large
metropolitan areas is not a way to solve this crisis. We need the
Senate Banking Committee to provide more flexibility and access to
tools like CDBG and HOME to work for every community to construct more
housing. A one-size-fits-all solution does not work.
In addition to programs that help working families, the Federal
Government needs to invest in communities that are innovating to solve
this problem. For example, the Federal Government can provide resources
to assist communities in simplifying their development review process
through hiring more staff and auditing the entirety of their code.
Additionally, the Federal Government can offset the costs of
infrastructure construction and improvement in exchange for denser
development. No Mayor or any other community member expects the
Government to construct new housing from the ground up, but we do
expect you to act rather than sit on your hands in the middle of a
crisis. Your actions can provide tools to local governments and fill
the gaps that the private sector is not currently meeting.
Housing is not the only aspect of Bozeman's infrastructure under
the Banking Committee's jurisdiction in need of more significant
Federal investment. Our public transit system, called Streamline, is an
invaluable service in our community by providing more than 300,000
rides per year. \5\ Federal dollars could allow Streamline to expand
its route network to serve more members of our community. Additionally,
Streamline could use Federal money to upgrade to a greener fleet in
line with Bozeman's climate goal to reduce emissions.
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\5\ https://streamlinebus.com/about/achievements/
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On behalf of the more than 50,000 residents of Bozeman, I am urging
you to fund housing in the American Jobs Plan and to allow us to
continue to build the infrastructure to keep Bozeman the Most Livable
Place.
Thank you, Chair Brown, Ranking Member Toomey, and Members of the
Banking Committee; I look forward to your questions.
______
PREPARED STATEMENT OF COREY WOODS
Mayor, Tempe, Arizona
June 15, 2021
Good morning Chairman Brown, Ranking Member Toomey, and Members of
the Committee. Thank you for inviting me to be here today to speak with
you about the housing and transportation infrastructure needs of
America's cities.
I am the Mayor of Tempe, Arizona. You may not have heard as much
about our city as our neighbors in the Maricopa County urban area such
as Phoenix and Scottsdale, but we are a thriving and innovative city.
The 2020 Census will likely say that about 200,000 residents live
within our borders. However, due to many businesses that call Tempe
home, including the main campus of Arizona State University, we have a
daytime population that is 70 percent greater than our census
population. We are a land-locked community, so we only have the option
to build up as we continue to grow in size. With our focus on
sustainable development, density and public transportation are central
to our city's long-term planning.
The median income of Tempe residents is about $58,000, a bit lower
than the national average of $62,800. But the average cost of a home is
more than $270,000, nearly 25 percent higher than the national average.
In Tempe, this disparity between income and housing costs results in 42
percent of renters and 24 percent of homeowners being considered cost-
burdened, which HUD defines as when a household pays more than 30
percent of their annual gross income on housing expenses.
In addition to a dire need for more affordable housing for middle-
income workers, we also have struggled with addressing the housing
needs of individuals experiencing homelessness. From 2015 to 2020,
Tempe experienced an increase of over 900 percent in our unsheltered
population. Federal programs such as Community Development Block
Grants, HOME Investment Partnership Programs and Emergency Solutions
Grant funding have become essential components in delivering housing
options to our most vulnerable populations. In 2016, Valor on Eighth, a
50-unit affordable housing development that serves veterans and their
families opened to our community. This project used CDBG to acquire the
land and HOME funds assisted with the construction of the facility. Low
Income Housing Tax Credits (LIHTC) were utilized to finance the
development while Project Based Vouchers in the facility allows for
long-term affordability to be financially viable for its residents.
Just last week, I was at the construction site of the Nation's first 3D
printed home. The City of Tempe transferred the property, originally
purchased through CDBG funds, to Habitat for Humanity for construction
of a total of 16 homes. This 3D-printed home offers an innovative model
for the future of home ownership with a scalable, cost-effective
solution and the Federal Government has a part in this success story.
Our city has invested heavily in affordable housing initiatives.
Through our Hometown for All initiative, we negotiate voluntary
contributions from developers to our affordable housing fund and we
dedicate an amount equal to half of all permitting fees to these
efforts. Since January of this year, this program has raised nearly
$4.5 million. Our City Council recently approved investing $1.2 million
for the purposes of conducting environmental and archaeological
assessments on city owned land for the eventual development of 325
affordable rental housing units and 50 affordable home ownership units.
We are currently waiting for the developer to receive approval for Low
Income Housing Tax Credits in order to get the project started.
Unfortunately, even with the city's own investments, private
partnerships, and creative use of Federal programs, we do not come
close to meeting the needs of our cost-burdened residents nor
addressing our extraordinary increase in unsheltered individuals. Tempe
has benefited greatly from a 55 percent increase in allocations of
CDBG, HOME, and ESG over the last 5 years, and this upward trajectory
of Federal support is critical for us to continue our collaboration
with our private and nonprofit partners. We simply cannot begin to meet
the housing needs of our residents without increased Federal support.
Public transportation is the other key to our sustainable growth
strategy. Many of Tempe's future affordable housing projects will be
strategically located along the existing, metro-area Light Rail system.
This regional train creates a travel corridor between central Phoenix
and Mesa, the third largest city in the State, with downtown Tempe and
the ASU campus at the center of the regional light rail system.
We have been fortunate to have broad support from our business
community for a proposed expansion of this system, known as the Tempe
Streetcar program. Businesses located along the Streetcar corridor have
instituted voluntary self-assessments to contribute to the project's
funding needs. Recently, the Federal Government, through the Federal
Transit Administration, approved additional funding for the Streetcar
project and we are grateful for that investment. Mesa, our neighboring
municipality, and home to the Chicago Cubs spring training facility,
has partnered with us to explore the feasibility in expanding the
Streetcar from downtown Tempe into the City of Mesa. This expansion
would span the public transportation corridor through downtown Tempe,
ASU's upcoming 355-acre innovation corridor, and a 1.3 million square
foot open air shopping development to the Cubs' Stadium, all the while
linking industrial zones and creating opportunity for future affordable
housing development.
Just Friday, our City Council held a joint meeting with the Boards
of the Tempe Chamber of Commerce, Tempe Tourism Office, and other local
business leaders. We work very closely with our private sector partners
to plan Tempe's future through thoughtful development that includes
affordable housing and public transportation to ensure financial
stability and access to economic opportunity for Tempe residents. We
invest a significant amount of Tempe tax dollars into these efforts and
are committed to expanding these community resources. We are hopeful
for an increased investment from the Federal Government so they can
become an even bigger partner in the process of planning for Tempe's
future.
I would be remiss if I didn't note that the city itself is managing
through challenging financial times.
The city's hotel transaction privilege tax revenues are down over
50 percent January 2021 as compared to January 2020, reflecting the
steep decline in travel and tourism to our region. Similarly, tax
revenue derived from restaurants/bars and amusements is down over 20
and 60 percent, respectively, over the same time period.
The loss of special events, ASU attendance, workers coming into the
high-rises downtown, conferences, and spring training has meant that
the city has fewer resources to provide services while our residents
and businesses are experiencing more needs.
To that end, we have been proactive in enacting cost cutting
measures for the city, and Federal aid has played an important part in
helping to maintain services while offering relief programs for our
residents and businesses. Increased investments in infrastructure would
provide the city with an important tool to address the negative
economic impacts of COVID-19 and continue to develop our community with
a sustainable and smart approach.
We need continued and increased Federal dollars to supplement our
local investments in affordable housing, public transit,
infrastructure, and programs to provide relief to the homeless, those
at risk of eviction, and other at-risk groups as our economy recovers
and local revenues get back on track.
I am so grateful for the time you have allowed me to speak to you
about Tempe's perspective. I feel fortunate to do what I do every day.
I look forward to answering any questions you might have.
Additional Resources
Tempe data source: https://www.census.gov/quickfacts/tempecityarizona
National data source: https://www.census.gov/quickfacts/fact/table/US/
PST045219
Tempe Affordable Housing Strategy: https://www.tempe.gov/home/
showpublisheddocument/75941/637008820631300000
City of Tempe Hometown for All: https://www.tempe.gov/home/
showpublisheddocument/86729/637424358222370000
Maricopa Association of Governments, Point In Time Count: https://
www.azmag.gov/Programs/Homelessness/Point-In-Time-Homeless-Count
Maricopa Association of Governments, Management Committee Meeting, Day
Time Population: http://azmag.gov/Portals/0/Documents/MagContent/
MC--2018-04-11--AGD-Packet.pdf?ver=2018-04-04-111733-210
______
PREPARED STATEMENT OF JOHN PARSONS
County Commissioner, Lancaster County, Pennsylvania
June 15, 2021
Thank you Chairman Brown, Ranking Member Toomey, and the other
Members of the Committee.
My name is Josh Parsons and I am Chairman of the Board of County
Commissioners in Lancaster County, Pennsylvania. I am a former
prosecutor and a former Army Infantry Officer.
The Board of County Commissioners is the seat of legislative and
executive powers in the county and has broad authority over the
county's budget and finances, taxes, debts, and contracts.
At around 550,000 citizens, Lancaster County is the 6th most
populous of Pennsylvania's 67 counties. Although best known for our
Amish and Mennonite communities, like Pennsylvania itself, we are a
diverse community with urban, suburban, and rural residents. Lancaster
County is made up of 60 municipalities--1 City, 18 Boroughs, and 41
Townships.
We pride ourselves on fiscal restraint and responsibility.
Lancaster County Government has approximately the highest general
fund balance (like a personal savings account for an individual) that
it has had ever. This was achieved through conservative budget
management, not raising taxes. Lancaster County's current Board of
Commissioners has never raised taxes. In fact, our county taxes have
not been raised in nearly a decade, which is difficult to do as a
county in Pennsylvania.
Lancaster County has the 3rd lowest tax rate of the 67 counties in
Pennsylvania and the lowest of any large county. Our bond rating has
been rising and we have been good stewards of our infrastructure. We
are steadily working through a plan to repair or replace all of our
structurally deficient bridges.
Like everywhere else, the last year-and-a-half has been a challenge
for Lancaster County. We went into COVID with the best economy we had
seen in a generation. Our businesses were thriving and wages were
rising for all groups and demographics.
The impact of the pandemic, and our Governor's ensuing draconian
lockdowns and refusal to address the economic damage of the pandemic,
did great harm to our economy.
However, I am very proud of our County's response to COVID. Our
County favored a middle course--we addressed COVID and the economic
crisis. We pulled together as a community and executed what in many
ways was a model medical and economic recovery plan in the Commonwealth
of Pennsylvania.
The Federal CARES Act resources were instrumental in our recovery.
Lancaster County received approximately $95 million. This was a huge
amount of money for us. These funds were disbursed to us very rapidly
after passage of the bill and arrived during the crisis. We in turn put
the money quickly to use for both our medical and economic recovery
plans across our county. The CARES Act had sufficient flexibility in
the Treasury guidance that counties were able to use it in varied and
necessary ways.
As fiscal conservatives, we were, of course, concerned about the
cost of the CARES Act and the debt being accrued at the national level
to pay for it. But we recognized it was a necessary response to the
crisis because the Government had effectively shut down the economy and
prevented people from earning a living. We felt a heavy responsibility
to use the money wisely to help our community.
Unlike the CARES Act, I do not think the so-called American Rescue
Plan was necessary. Under this Act Lancaster County is slated to
receive about $106 million. Again, this is a huge amount of money for
us. Moreover, every other county in Pennsylvania, and many other
municipalities, are receiving allocations.
This money is arriving after the COVID crisis is over. And now come
proposals for even more money to be sent out through an infrastructure
plan.
At this point, rather than sending out more money, the better
solution would be to get Government fully out of the way and let the
economy come roaring back.
As I talk to people around my county, what I hear about is concern
about costs going up. Groceries, gas, lumber--everything costs more.
Inflation is a natural and predictable result of huge amounts of
money being pumped into the economy. Numbers from May show inflation is
up 5 percent. All this new money is chasing the same amount of goods
and services, including here in Lancaster County.
Inflation hurts working class people in Lancaster County the worst
because rising prices for things like groceries and gas outpace wages.
You can see and feel this happening already around us. It also eats
away at the value of any money put away in a bank account for a rainy
day.
So, I would fervently ask that before you consider borrowing more
money from our grandchildren to hand out across the country--just stop
and take a pause. There is a huge amount of money already circulating.
For example, if you want to provide for infrastructure, Congress could
allow more flexibility for counties, and other municipalities, in the
use of the existing American Rescue Plan funds. What need there still
is could then be addressed in a much more targeted way.
Please do not further bankrupt our country and take from our yet
unborn grandchildren without first waiting to use the existing massive
amounts of money that have already been distributed to States and local
governments.
Thank you.
______
PREPARED STATEMENT OF BRIAN RIEDL
Senior Fellow, Manhattan Institute
June 15, 2021
Good morning Chairman Brown, Ranking Member Toomey, and Members of
the Committee. Thank you for inviting me to participate in today's
hearing.
My name is Brian Riedl. I am a Senior Fellow in Budget, Tax, and
Economic Policy at the Manhattan Institute for Policy Research. The
views I express in this testimony are my own, and should not be
construed as representing any official position of the Manhattan
Institute.
My testimony today will offer four principles for responsible
infrastructure investments:
First, Congress should avoid piling on new taxes or debt.
The Federal budget is already facing $100 trillion in baseline
deficits over 30 years, and any taxes should address that
first.
Second, State and local governments should use for
infrastructure the $530 billion in additional Federal windfalls
they have recently received. In fact, infrastructure is a
perfect use of one-time Federal funding.
Third, any additional Federal investments should be funded
within the current $61 trillion spending baseline over the
decade. The offsets are there if infrastructure is truly a
Congressional priority.
Finally, America's main infrastructure policy challenge is
not funding, but rather the slow, bureaucratic, high-cost
implementation of the policies. Spending another $1 trillion
without making these programs more effective is a poor use of
taxpayer dollars.
As an addendum, I will show that there is a broad economic
consensus that infrastructure policies do not provide short-term
stimulus, and most new construction jobs are redistributed from other
jobs.
Principle #1: No New Taxes or Deficits
Washington has proven to be increasingly unable to pay for its
current spending commitments. It is on pace to borrow nearly $7
trillion across 2020 and 2021, and faces $100 trillion in baseline
budget deficits over the next 30 years. Adding trillions more in
spending will further raise the spending baseline to levels that no
plausible tax system can finance. Even if this new infrastructure
spending is financed with trillions in new taxes, that would still use
up a large portion of the taxes that will instead be needed to address
the $100 trillion in baseline deficits. Thus, lawmakers should commit
to not worsen the unsustainable budget outlook by adding more debt, or
diverting its limited tax options into financing new spending programs.
Let's dive deeper into the numbers. The cost of the American Jobs
Plan\1\--$2.6 trillion over 8 years, an average of 1.25 percent of
GDP--would represent the most expensive nonemergency spending bill in
at least 50 years.\2\ And it follows Washington enacting $5.4 trillion
in (mostly necessary) pandemic spending over the past 12 months--a
total that comprises one-fifth of the entire national debt. The
American Families Plan would add $1.8 trillion more in spending.
The underlying fiscal outlook is unsustainable. The national debt
held by the public is already projected to double from $17 trillion to
$35 trillion between the end of 2019 and 2030.\3\ If President Biden's
entire campaign agenda is enacted, and expiring provisions are
extended, it would mean the national debt rising from $17 trillion to
$44 trillion over that period.\4\ This would leave the national debt at
130 percent of GDP, or one-quarter higher than at the end of World War
II.
And it only gets worse thereafter. The Congressional Budget Office
projects that--due overwhelmingly to escalating Social Security and
Medicare shortfalls--Washington will run $100 trillion in baseline
budget deficits over the next 30 years. This would leave the national
debt at nearly 200 percent of GDP. At the end of that period,
Government interest payments will consume half of all tax revenues.\5\
That is the rosy scenario that assumes no new legislation is
enacted, the 2017 tax cuts expire, no new recessions, and low interest
rates. If interest rates exceed the CBO baseline assumption by even 1
percentage point, it would add $30 trillion in interest costs over
three decades. Deficits would reach 18 percent of GDP, the debt would
hit 264 percent of GDP, and two-thirds of all tax revenues would merely
pay the interest on the debt.\6\
That is simply the CBO baseline, with interest rates rising by an
additional percentage point.
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And that is why it is shortsighted to assert that low interest
rates make this the right time to borrow. Washington is behaving like a
subprime homeowner and making long-term debt commitments based on
short-term interest rates. The average maturity of the U.S. debt is 5
years and declining, which means most of the national debt would
quickly roll over into any future interest rate increase.
In short, the Federal Government is essentially gambling our fiscal
future on the hope that interest rates never again exceed 4 percent.
Because if they do, simple math shows that combining rising interest
rates with a debt approaching 200 or 300 percent of GDP risks a
catastrophic debt crisis.
In that context, Washington should focus on paying for our current
escalating commitments before undertaking the most expensive
nonemergency spending bill in half-a-century.
Some suggest that fully financing this infrastructure bill with new
taxes would make it fiscally responsible. That is not the case. If a
family facing a $100,000 credit card debt suddenly finds a $20,000
windfall, spending it all on expensive new furniture would not be a
responsible use of that money simply because it is ``fully paid for''
by the windfall. Similarly, there is a limited universe of plausible
tax increases on families and businesses.\7\
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Enacting all of these taxes would not even close the current 10-
year projected budget deficit of $14.3 trillion, much less finance the
President's new spending proposals.\8\ And even if they did, the
escalating spending levels projected by CBO would re-open large budget
deficits in the 2030s and 2040s.
In short, it will take aggressive tax increases--or drastic and
painful spending cuts--just to finance Washington's current
commitments. Applying the easiest $3 trillion in taxes to a historic
spending expansion simply leaves fewer options to close the remaining
deficits. The only people left to pay the remaining taxes will be the
middle class.
Large spending increases create the difficult financing choice
between using up our limited plausible tax increases, and going deeper
into debt. The American Jobs Plan includes approximately $1.8 trillion
in new corporate taxes that dwarf the $300 billion in net corporate tax
cuts (over 10 years) enacted in the 2017 Tax Cuts and Jobs Act. That
law reduced the corporate tax rate from 35 percent to 21 percent, but
offset most of those savings by curtailing key business tax
preferences. The president would raise the corporate rate back to 28
percent (33 percent including State taxes)--restoring America to the
highest rate in the OECD--while also raising international taxes and
retaining the lost 2017 tax deductions. Moreover, the president would
severely weaken the 2017 tax reforms that finally gave U.S.
multinational corporations a more level playing field when competing
internationally. Now, once again, American companies abroad may face
higher tax rates than our global competitors.
No, infrastructure won't pay for itself through economic growth.
Some advocates suggest that infrastructure spending is not a major
budgetary drag because it will provide enough growth and prosperity to
pay for itself, or at least become more affordable down the road. This
spending version of the free-lunch Laffer Curve collapses under basic
scrutiny. Infrastructure spending is not like borrowing $100,000 for a
college degree that brings $1 million in higher future income. A
Government program requires a 500 percent return on investment to pay
for itself in future tax revenues. (Imagine a $100 expenditure creating
$500 in new GDP that is then taxed at the long-term average Federal
rate of 20 percent to bring in $100 in tax revenues.)
Do Government investments typically produce a 500 percent return?
Try 5 percent. A 2016 CBO report concluded that Federal investments
typically return only 5 percent\9\--compared with 10 percent for
private-sector investments--because Federal investments are costly,
bureaucratic, unresponsive to market forces, and are often offset by
State and local governments cutting back their own investments. Under
this rate of return--and adjusted into net present values--it would
take 100 years for tax revenues to recoup even 20 percent of the cost.
Moreover, this 5 percent figure refers to traditionally defined
Government investments, rather than new broader definitions that
include roughly $2 trillion in combined proposals for long-term care
for seniors, corporate welfare, public housing, Government-building
renovation, child credits, and Affordable Care Act subsidies. By
contrast, just $500 billion of the American Jobs Plan and American
Families Plan would go toward roads, bridges, highways, airports, water
transportation, and even electrical infrastructure. Some of those other
policies may have merit, but they are not going to bring a historic
burst of new productivity and economic growth that recoups any
significant share of the initiative's $4 trillion overall cost.
In fact, economists at the University of Pennsylvania found that
the spending provisions in the American Jobs Plan would actually reduce
economic growth and wages over the long-term. Any modest productivity
benefits from these new public investments would be more than offset by
the productivity losses caused by the necessary Government borrowing
crowding out more-productive private-sector investment. In other words,
stronger economic growth means encouraging private-sector investment,
not transferring those resources to the Government. Specifically, the
Penn-Wharton Budget Model projected that the infrastructure spending in
the American Jobs Plan will--over the long run:
Create no net jobs;
Reduce wages by 0.3 percent (0.8 percent when including the
proposed taxes);
Reduce the capital stock by 1.5 percent (3.0 percent when
including the proposed taxes);
Reduce the GDP by 0.3 percent (0.8 percent when including
the proposed taxes).\10\
So not only would the President's infrastructure proposal fail to
produce the 500 percent return needed to pay for itself, it would
likely produce a negative overall return.
Additionally, on the tax side of the proposal, the Tax Foundation
estimates that:
An increase in the Federal corporate tax rate to 28 percent
would raise the U.S. Federal-State combined tax rate to 32.34
percent, highest in the OECD and among Group of Seven (G7)
countries, harming U.S. economic competitiveness and increasing
the cost of investment in America. We estimate that this would
reduce long-run economic output by 0.8 percent, eliminate
159,000 jobs, and reduce wages by 0.7 percent. Workers across
the income scale would bear much of the tax increase. For
example, the bottom 20 percent of earners would on average see
a 1.45 percent drop in after-tax income in the long run.\11\
Principle #2: States Should Use Their Federal Windfalls
State and local governments have received more than $850 billion
from the Federal Government's pandemic emergency bills.\12\ A portion
of this spending was for necessary costs related to public health. On
the flip side, State and local governments recently received $350
billion to close budget deficits that--for the most part--no longer
exist. California's State government received $26 billion (and their
local governments received an extra $16 billion)\13\ despite facing a
$75 billion surplus for the upcoming fiscal year.\14\ My home State of
Wisconsin has reported an ``unprecedented'' revenue surge and projects
a $5.8 billion surplus over the next 2 years--enough to rebate 30
percent of all State income taxes.\15\ And yet the State will receive
an additional $2.5 billion bailout from Washington, DC, to address a
budget shortfall that does not exist. These stories are being repeated
across America: State and local governments with large one-time cash
windfalls that they do not know how to spend, as well as frustration of
strings attached on Federal funds they are receiving.
States are also holding approximately $180 billion in unspent K-12
education grants from earlier relief bills.\16\ This money is
purportedly to cover pandemic-related renovations and costs, but CBO
estimates that most will not be spent until between 2023 and 2028,
likely well after COVID has passed.\17\
All in all, State and local governments are sitting on more than
$500 billion in Federal funds, the vast majority of which lacks any
clear direct purpose. It would be irresponsible for States to create
new permanent spending programs that outlast this temporary cash
windfall, and Washington has tried (perhaps unconstitutionally) to
forbid these States from cutting taxes. Thus, applying most of that
$500 billion towards a one-time infrastructure boost makes the most
sense.
This amount is well sufficient for most States. Government at all
levels spends approximately $235 billion annually on highways, roads,
and bridges,\18\ split equally between capital improvements and
maintenance.\19\ Even applying half of the States' $500 billion towards
highways, roads, and bridges would more than double the $115 billion in
the President's plan, and amount to a doubling of their total budget--
surely enough to meaningfully address any backlog (without Washington
micromanagement of the projects).
And it would cost taxpayers nothing above what Congress has already
distributed.
Additional State spending can go towards other infrastructure needs
such as modernizing the electrical grid, purifying the water supply,
improving broadband access, or renovating schools. Even putting $100
billion into these priorities would represent ``moonshot'' reforms over
current spending levels.
The key question is how to encourage State and local governments to
apply these funds towards infrastructure. Congress could offer perhaps
$150 billion in infrastructure matching funds (this is still much
cheaper than Washington spending $2 trillion) and also pass legislation
freeing up the education funds for broader infrastructure uses. At the
same time, if governors truly resist investing their large windfalls in
infrastructure, that may be a sign to Washington that it is less of a
national priority after all.
Principle #3: Washington Can Add Spending Within the Current Budget
It is not unreasonable for Washington to contribute somewhat more
to infrastructure, whether through matching funds for States, or truly
national projects like interstate waterways or rail. But Washington is
already projected to spend more than $60 trillion over the next decade.
If it cannot apply $500 billion of that amount towards infrastructure
priorities--less than 1 percent of the budget--then it is fair to
question how serious Congress and the President are about
infrastructure. Congress already spends $306 billion annually on
nondefense investment (including $112 billion for physical
infrastructure), and should be able to repurpose some of this
spending.\20\
The most straightforward carve-out would bring back caps in
discretionary spending. Rather than drastically increase this spending
by 8.4 percent as President Biden has proposed, Washington could save
$500 billion over the decade by cutting that budget by 1.5 percent in
2021, and then capping its annual growth at the inflation rate over the
decade. Alternatively, Congress could inflation-adjust Federal spending
using the more accurate chained CPI, sell hundreds of billions worth of
excess Federal assets and land, or even begin broader entitlement
reforms.\21\ Some modest rescissions of leftover pandemic spending may
be available as well. The money is there if Congress wants to pay for
infrastructure.
As an alternative to taxing the rich, I have recently released a
report proposing upwards of $1 trillion in potential savings over the
decade from reducing spending benefits for these same upper-income
families.\22\ This includes slightly trimming Social Security benefits
and raising Medicare premiums for retirees with millions in financial
assets, and reducing farm subsidies for families earning more than
$300,000 annually. Spending savings are never easy or popular, but
living within our means and building a sustainable Federal budget means
that new priorities should be offset with lower-priority savings.
Principle #4: Reform Infrastructure Waste and Delays--Do Not Throw
Money at an Unreformed, Broken System
The easiest answer to most political problems is simply to throw
more money at them. Yet America's infrastructure is not held back by
low spending levels, but rather by its status among the world's most
expensive, bureaucratic, and slowly built. It has become cliche to
contrast the 410 days needed to build the Empire State Building in
1930-31 with the more recent 25-year process of building Boston's ``Big
Dig.'' Yet the persistence of delays, cost-overruns, and death-by-
NIMBYism can be seen today in California's high-speed rail project that
is now expected to take nearly 40 years from planning to completion
(which itself is increasingly unlikely) and cost $70 billion more than
originally estimated.
Our infrastructure can certainly use some upgrades, particularly
its roads and electrical grid. That said, the crumbling State of
American infrastructure has been overstated. A 2019 report of the World
Economic Forum ranked the United States' infrastructure first among the
10 geographically largest countries (i.e., the countries that likely
have the most extensive infrastructure needs).\23\
Similarly, last year a Congressional Research Service report titled
``The Condition of Highway Bridges Continues to Improve'' noted that
``the number and share of bridges in poor condition have dropped
significantly over the past 20 years. Furthermore, repairing every
deficient bridge in just a few years is unrealistic, and not every
bridge repair is likely to be justified when considering both the
economic benefits and costs. FHWA's own analysis of bridge data
suggests a relatively modest increase in spending could substantially
reduce or eliminate the backlog of economically justifiable investments
if sustained over a 20-year period.''\24\
Spending levels remain healthy. Transportation infrastructure
spending (adjusted for inflation) rose from $332 to $371 billion
between 2008 and 2018.\25\ Government spending on transportation and
water infrastructure at all levels is 2.3 percent of the GDP ($440
billion), just slightly below the 30-year average of 2.5 percent.\26\
That said, there has been a modest shift from capital spending to
operations and maintenance. Spending on energy and the electrical grid
continues to rise, although challenges remain.\27\
America's main infrastructure challenge is not spending levels, but
rather its general ineffectiveness per dollar spent. In 2016, CBO
released a report entitled ``The Macroeconomic and Budgetary Effects of
Federal Investment''. Economist Scott Hodge succinctly summarizes the
reports three leading conclusions:\28\
1. ``Federal investments deliver only half the economic returns as
private sector investments, 5 percent versus 10 percent.
2. A dollar of Federal spending results in only $0.67 worth of
actual investment because State, local, and private sector
entities reduce their spending in response to the Federal
dollars.
3. Federal investment financed by debt or taxes could do more
economic harm than good because Federal borrowing and taxes
crowd out private investment. To avoid harming the economy,
Federal investments should be financed by cuts in other
discretionary programs.''
Diving deeper, America's transportation infrastructure is among the
most expensive, bureaucratic, and slowly built in the world.\29\
Consider that:
The cost of interstate construction spending per mile
quadrupled from 1960 through 1990, and has continued to grow
since then (adjusted for inflation).\30\
Labor costs are higher in part because the Davis-Bacon Act,
which mandates that those awarded Government contracts pay a
``prevailing wage,'' raises wage costs by as much as 22
percent.\31\
Government-mandated project labor agreements (PLAs) have
been shown to significantly raise labor costs as well.\32\
America requires many more workers to do the same
construction work as Europe.\33\
Most U.S. construction projects are performed only during
the workday, while much of Europe has round-the-clock
shifts.\34\
U.S. subway systems are by far the most expensive to build
in the world, and in New York City cost quadruple the world
average to build. The difference is high labor costs, poor
contractor work, poor oversight, and defensive designs meant to
avoid a cascade of stakeholder lawsuits related to
environmental and historical artifact protection.\35\
Coordination between various local governments and
stakeholders--while often necessary--brings endless delays and
veto points, particularly for transportation projects.
Nearly a century ago, the Empire State Building was built
in 410 days. More recently, Boston's Big Dig took 25 years from
planning to completion. Today, California's high-speed rail is
expected to take nearly 40 years from planning to completion.
Some delays are helpful--we want to ensure safety and
environmental protection--but the U.S. has become a global
outlier.
A major cause of delays are the necessary-but-slow Environmental
Impact Statements and Historical Artifact Reviews. Consider that:
Environmental reviews commonly exceed 1,000 pages and
require on average 7 years to complete (compared to no more
than 1 to 2 years in Canada and 3.5 years in the European
Union).\36\
Several environmental impact statements now take more than
17 years to complete--and no ground can be broken until the
project has survived the legal process, including appeals by
any litigant.\37\
In America--unlike many other countries--environmental and
historical reviews can be challenged in court by a wide range
of stakeholders, and these challenges can take years or even
decades to be decided. Other countries use faster, nonjudicial
options to enforce these regulations, rather than expensive and
time-consuming lawsuits that essentially become a project
veto.\38\
Megan McArdle cites an egregious example: ``The
Southeastern High Speed Rail Corridor was proposed in 1992. You
will be thrilled to learn that in September 2017, the
Department of Transportation announced the completion of the
project's Tier II Draft Environmental Impact Statement.''\39\
President Biden's physical infrastructure component throws $1
trillion at this broken system. In fact, it would raise costs further
by tightening higher-wage requirements and imposing stricter ``Buy
America'' requirements that limit trade and lower-cost options. And it
allocates more funding to transit and high-speed rail ($165 billion)
than highways, roads, and bridges ($115 billion) despite the surging
costs\40\ and declining public interest\41\ in the former.
There is certainly a case for increasing infrastructure investment.
But any new funding should be accompanied by reforms to spend that
money more effectively.
The $213 billion proposal to build, rehabilitate, and retrofit
millions of homes is expensive and vaguely defined. While public
housing should obviously not be left in disrepair, lawmakers should
focus more on housing vouchers that provide low-income families with
more options to escape public housing if they so choose. Thus, building
more private housing and addressing zoning restrictions would be more
helpful. That said, local communities must play a lead role.
Additionally, the proposal to ``build, preserve, and retrofit homes''
is vaguely defined, and it is unclear if tax credits will be sufficient
to bring such expensive projects--especially given the push for more
expensive unionized workers in an industry that is only 13 percent
unionized.\42\
Additionally, the proposed $100 billion for K-12 school
construction and renovation ($50 billion in direct grants plus $50
billion through bonds) is unnecessary. School construction has long
been a responsibility of State and local governments, and federalizing
this role engages in mission creep while diminishing the role of the
governors, mayors, and school boards closer to these schools.
Furthermore, States are flush with $180 billion in K-12 grants from
earlier pandemic bills that well exceed their COVID-related expenses
(which is why CBO assumes most will not be spent until between 2023 and
2028).\43\ Congress should clarify that these $180 billion in recent
grant funds may be used for broader education expenses.
Addendum: Economists Agree That Infrastructure Is Not ``Stimulus'' or
Job Creation
Finally, let's address the ``jobs'' portion of the American Jobs
Plan. The Biden administration and other advocates assert that massive
infrastructure spending will stimulate short-term economic growth and
create jobs.
Economists across the political spectrum have debunked this myth
for the obvious reason that infrastructure projects require several
years of planning and regulatory reviews before they begin--at which
point the economy has already recovered. In fact, as stated above,
environmental impact statements typically take 7 years to complete.
After allocating $94 billion for mostly ``shovel-ready'' stimulus
projects in 2009, President Obama later joked that ``Shovel-ready was
not as . . . shovel-ready as we expected.''
Former Obama White House chief economist Jason Furman and former
Congressional Budget Office director Doug Elmendorf added that ``In the
past, infrastructure projects that were initiated as the economy
started to weaken did not involve substantial amounts of spending until
after the economy had recovered.''\44\
Delays are not the only stimulus barrier. Stanford economists John
Cogan and John Taylor observed that State and local governments
receiving 2009 Federal stimulus infrastructure grants simply cut back
on their own spending and borrowing almost dollar-for-dollar,
completely negating the impact of the Federal spending.\45\
The stimulus case is also undermined by Washington distributing
spending largely based on politics rather than local economic needs.
Harvard economist Edward Glaeser revealed that 2009 stimulus dollars
were disproportionately distributed to regions with lower unemployment
rates that did not need stimulus. On one level, this makes sense--many
high unemployment regions are rural or losing population, and are thus
not the best candidates for widening local highways or adding high-
speed rail. However, this approach exposes the disconnect between the
goals of infrastructure and job creation. Glaeser also writes that,
unlike the past infrastructure projects that relied more on manual
labor, today's ``big infrastructure requires fancy equipment and
skilled engineers, who aren't likely to be unemployed.''\46\
Because of these factors, a review of 2009 stimulus highway
projects shows no sustained effect on county-level employment.\47\
Another study found that half of all new employees hired at firms that
received stimulus dollars had been poached from other firms (rather
than coming from the ranks of the unemployed), and many of these
companies were forced to turn down other construction projects to
accommodate the new ``stimulus'' projects.\48\
Overall, CRS examined highway spending and concluded that ``to the
extent that financing new highways [comes from] reducing expenditures
on other programs or by deficit finance . . . the net impact on the
economy of highway construction in terms of both output and employment
could be nullified or even negative.''\49\
Adherents to the infrastructure stimulus argument should consider
the case of Japan, which responded to a sustained economic downturn
with $6.3 trillion in infrastructure investment between 1991 and
2008.\50\ One of the largest investments in airports, trains, highways,
and tunnels in world history helped push Japan's national debt from 38
percent to 140 percent of GDP, yet its per-capita GDP was roughly the
same in 2008 as in 1994.
Third, political considerations can limit the stimulative effect of
infrastructure. The geographic distribution of infrastructure spending
has historically been driven by the political leverage of lawmakers, as
well as political considerations within Federal agencies. It is naive
to expect politics remove to be removed from the allocations.
Consequently, Washington has historically over-invested in large
vanity projects that provide ribbon-cutting ceremonies. such as high-
speed rail, the expansion of interstate highways, and the famous (and
eventually canceled) $223 million ``Bridge to Nowhere.'' However,
economist Aaron Renn has shown that ``America's infrastructure crisis
is local,'' and repairing local streets, bridges, and potholes is a
much higher and more affordable priority. These locally managed
projects are often ineligible for Federal funding.\51\
State governments face their own misaligned incentives with Federal
dollars. A State funding a $100 million project with its own
transportation revenues must convince its taxpayers that the project
will provide $100 million in value. By contrast, if the State is
required to put up just $20 million of its own funds--and can use a
Federal infrastructure grant for the remaining $80 million--it need
only convince its citizens that the project is worth $20 million. In
other words, the ability to offload the costs on the Federal Government
makes States more cavalier with how the funds are spent.
Consequently, past infrastructure stimulus bills and
reauthorizations have not sufficiently relieved traffic congestion,
repaired bridges and roads, or improved waterways. Instead, they
brought unfinished high-speed rail projects, cost overruns, a $3.4
million ``eco-passage''\52\ to help turtles cross a highway in
Tallahassee, Florida, and a $54 million ``Napa Valley Wine Train.''\53\
Better to eliminate the Federal middleman and empower State and local
governments to more easily raise the funds to finance local projects
based on local priorities.
Conclusion: Fix the System First, and Be Fiscally Responsible
The laws of economics have not been repealed. Budget constraints
still exist. Doubling or tripling the national debt is extraordinarily
reckless. There is no guarantee that interest rates will never rise
again--indeed such a result is overwhelmingly likely. There are no
plausible taxes that can finance the projected spending levels, and
counting on the Federal Reserve to monetize much of this debt is a
recipe for economic chaos.
Spending $1 trillion on infrastructure without fixing the
underlying waste, inefficiencies, and delays in our system represents
an extraordinary missed opportunity, and confuses spending levels with
outcomes. Lawmakers should first reform the infrastructure costs and
delays, and encourage States to use their $530 billion in Federal aid
to address local infrastructure priorities.
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RESPONSES TO WRITTEN QUESTIONS OF SENATOR TESTER
FROM DANIEL HORRIGAN
Q.1. What does this lack of housing mean for your community and
other places with housing challenges?
A.1. We have made significant investment around trying grow our
population. Rather than manage population decline, I have made
an intentional and strategic decision to understand our real
estate market supply and demand, leverage our considerable
urban assets, and compete for people and investment.
But none of this is easy. A lack of competitive residential
options in many of our older residential neighborhoods
translates into many people making decisions with their feet
and moving to surrounding communities.
As the city's population has declined, from a high of
290,000 in 1960, to 197,000 today, our city budget has
struggled to keep up with demands and legacy costs for public
services (police, fire, streets, aging and outdated water and
sewer infrastructure) that have not shrunk along with the
population, but have increased. As a result, residents today
are paying proportionally more in taxes and fees for basic city
services than residents in the past were.
Inadequate and obsolete housing, along with a lack of new
construction, has led to population loss, which in turn has led
to a loss of tax base, jobs, and shopping opportunities in our
city, as people, employers, and stores have relocated to our
suburbs.
Q.2. What are the greatest challenges that you seen your
communities to access and affordability of housing?
A.2. Akron, like many of the Nation's legacy cities, has a
large proportion of its housing that is older and was built for
people living at a different time, with different needs and
expectations. Much of our housing was built for industrial
workers in the early 20th century, and while some of these
homes have aged gracefully, many are in need of significant
repair, and many are functionally obsolete, lacking many of the
basic features that homeowners are looking for today.
We have an oversupply of older housing that is not very
marketable in today's day and age, and an undersupply of modern
houses and apartments with features that today's buyer or
renter is looking for.
Essentially our challenge is threefold: (1) Replace some of
our older, unmarketable, and obsolete houses; (2) Repair many
of our older, but still marketable houses; and (3) Build more
new houses and apartments that today's consumers are looking
for.
We are working on reforming our zoning code, which, like
those in many cities, is outdated and not as conducive as it
should be to allowing developers and builders to construct the
types of housing and commercial building that are in demand
today: a greater variety of single-family houses, townhomes,
and apartments; a mix of residential and retail land uses; and
an urban environment that is walkable and prioritizes good
urban design, such as having buildings built up to the
sidewalk, with the parking located in the rear.
Q.3. Where are there gaps in resources from Federal programs?
A.3. While Akron has often been well-served by the Community
Development Block Grant (CDBG) funds in the past, I do believe
that this program, and other programs managed by the Department
of Housing and Urban Development (HUD) need to take a fresh,
innovative approach that better helps cities like Akron remain
competitive as places to live, work, and play.
Many Federal programs are still following the same general
playbook that was used in the 1970s and 1980s, and today we
have different needs than we did at that time.
I think that it is important that Congress and executive
branch agencies like HUD tailor Federal funding to assist
legacy cities like Akron, that often struggle with low real
estate prices which lead to appraisal gaps for new home
construction and where existing homeowners have difficulty
obtaining home improvement loans.
Today, we need Federal funds that are earmarked
specifically toward the housing needs of legacy cities like
Akron, which could leverage additional private and nonprofit
funding to help with appraisal gap financing, and to provide
assistance to lower and moderate income homeowners with basic
home repairs, so that our older urban neighborhoods can remain
attractive and competitive with newer neighborhoods in the
suburbs.
------
RESPONSES TO WRITTEN QUESTIONS OF SENATOR TESTER
FROM CYNDY ANDRUS
Q.1. Gap in Housing Need in Bozeman--What is the need, in terms
of units, for housing in Bozeman?
A.1. Bozeman, Montana, continues to face the challenges of
growth. Our 2019 Community Housing Needs Assessment (before the
COVID pandemic) revealed the City of Bozeman needs
approximately 6,000 units of housing constructed by 2025. To
meet that goal, the pace of construction would need to be over
850 units per year. We need units at every price point and for
every member of our community, especially as we watch housing
prices continue to climb.
Additionally, we continue to see a large influx of remote
workers and others relocating to Bozeman seeking a high-amenity
community. Our best estimate now is that 6,000 units of housing
is too low.
Q.2. Economic Trends--For years, the lack of housing has been a
challenge in Bozeman and many areas of Montana. It hasn't just
been a lack of affordable housing, but housing at any price
point. This is keeping families from being able to live and
work in their own communities. From your perspective,
What does this lack of housing mean for your community and
other places' housing challenges?
A.2. Bozeman's lack of housing is a direct result of our
explosive growth over the last several decades. As more and
more Americans have discovered the beauty and opportunity in
our region, they continue to relocate to Bozeman. While we
welcome anyone interested in coming to our great city, they
have placed a heavy burden on our housing market. Broadly, the
lack of housing is negatively impacting the ability of our
local businesses to expand due to a lack of employees.
Additionally, companies looking to come to Bozeman for
synergies in sectors like photonics, the outdoor industry,
bioscience, manufacturing, technology, health care, and others
are making decisions about relocating based on the availability
of housing that meets a variety of price points.
Currently, homeowners in Bozeman receive all-cash offers
well over their asking price in the first 48 hours of listing
their home. These offers are an excellent boon for residents
ready to depart Bozeman for a new career or be closer to
family. However, a competitive market and high prices make it
very difficult for residents to purchase their first home or to
move into a house with more space for their growing family.
Additionally, our residents, especially the elderly, living on
fixed incomes cannot keep up with rising property taxes,
maintenance costs, and spiraling housing prices. Given the high
demand for housing in the valley, the costs of labor and
materials have also skyrocketed. Finally, Bozeman is home to
Montana State University, where 17,000 of our Nation's best and
brightest pursue higher education. Students who are often
renters are watching their rent prices jump by 30-40 percent in
1 year as landlords see an opportunity to capitalize on a
market with very strong demand but severely limited supply.
Bozeman is one of the most desirable places to live in the
Rocky Mountain West. We are a regional retail and cultural hub
with excellent amenities, all contributing to our high quality
of life. As more and more people move to Bozeman, residents see
more economic opportunity, rising incomes, increased amenities,
and more demand for housing. No one in Bozeman is immune to the
pain of increasing housing costs. Our greatest fear is the
explosive growth in home prices will not only slow our economic
growth but will force working- and middle-class residents out
of Bozeman.
Q.3. What are the greatest challenges that you see in your
communities to access and affordability of housing?
A.3. Bozeman faces many challenges when attempting to create
more accessible and affordable housing for our community.
First, the cost of land continues to climb in Bozeman. If you
do not have land, you cannot build housing. High land costs set
a higher initial starting price for homes in Bozeman.
Second, the construction industry in Bozeman faces its own
unique set of challenges. Supply prices are very high,
including the much-reported high price of lumber. Additionally,
contractors are experiencing difficulty hiring plumbers,
carpenters, and electricians because of Bozeman's high cost of
housing and a lack of skilled tradespeople living in the
region.
Third, the City of Bozeman needs more robust transit
options. Without transit, homeowners and renters are paying an
additional cost for developers to construct parking on site.
Finally, we are currently conducting a code audit to look
at how our regulations, such as minimum lot sizes or parking
minimums, unintentionally drive up the cost of housing.
Further, Bozeman is interested in exploring ideas such as
guaranteed development review timelines, creating a database of
preapproved plans to reduce design costs, and reducing the
parkland requirements for new development.
Q.4. Where are there gaps in resources from Federal programs?
A.4. Federal programs up to this time have focused on the
lowest rungs of the housing ladder. Without the Federal
Government, it would be near impossible for our partners at the
Human Resource Development Council (HRDC) in Bozeman to
construct housing for those on the lowest end of the continuum.
However, even those programs remain woefully underfunded.
Opening funding to more census tracts in our community would
help to bridge the funding gap.
Further, cities like Bozeman often fall into a donut hole.
Bozeman does not qualify for most rural housing programs
administered by the U.S. Department of Agriculture but is not
large enough for dedicated formula funding from programs like
the Community Development Block Grant (CDBG) program. Thanks to
the leadership of Senator Tester with support from Senator
Daines, the City of Bozeman will likely become a metropolitan
area and, therefore, an entitlement community after the release
of the final population counts during the 2020 census.
Cities could use resources for the Federal Government to
purchase land, create revolving loan funds, hire more engineers
and community development staff to move projects through the
review process faster. Also, the Federal Government should
create grant programs encouraging cities to review their
development codes for provisions increasing the cost of
housing. Additional grants or tax credits should go to projects
that use upzoning or increase density to construct affordable
housing units. Cities need more resources to help remove
regulatory barriers and create new incentives to encourage
developers and the private sector to build more units.
Finally, we need more programs on all levels of the area
median income (AMI). Currently, programs like HOME cap funding
for housing at up to 80 percent of AMI. The City of Bozeman
calls on the Federal Government to expand eligibility for HOME
up to 150 percent of AMI. Bozeman and many similar cities need
an increase in AMI eligibility because the rise in home prices
far outpace wage increases for our workers. When it comes down
to it, the City of Bozeman needs more supply to create greater
options for all residents when selecting their housing.
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RESPONSES TO WRITTEN QUESTIONS OF SENATOR TESTER
FROM COREY WOODS
Q.1. For years the Jack of housing has been a challenge in
Bozeman and many areas of Montana. It hasn't just been a Jack
of affordable housing, but housing at any price point. This is
keeping families from being able to live and work in their own
communities. From your perspective, What does this Jack of
housing mean for your community and other places housing
challenges?
What are the greatest challenges that you see in your
communities to access and affordability of housing?
Where are there gaps in resources from Federal programs?
A.1. Response not received in time for publication.
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RESPONSES TO WRITTEN QUESTIONS OF SENATOR TESTER
FROM JOHN PARSONS
Q.1. For years, the Jack of housing has been a challenge in
Bozeman and many areas of Montana. It hasn't just been a Jack
of affordable housing, but housing at any price point. This is
keeping families from being able to live and work in their own
communities. From your perspective,
What does this Jack of housing mean for your community and
other places housing challenges?
A.1. Housing, like other products, is driven by market forces
and normally corrects unless there is overregulation that
distorts the market.
Q.2. What are the greatest challenges that you see in your
communities to access and affordability of housing?
A.2. Excess Government regulations at every level make
developing housing more expensive than it should be. This is
especially true in our city and boroughs where revitalizing
existing housing stock is important. Further, we should be
helping people in affordable housing move toward opportunities
for home ownership and self-sufficiency rather than
incentivizing long term, generational use of affordable
housing.
Q.3. Where are there gaps in resources from Federal programs?
A.3. There are numerous Government programs. The premise of the
question seems to assume there should be more. In Lancaster
County we contend you should focus on making existing
Government programs work more efficiently and effectively.