 Hi, I'm Reid Kramer. I direct the asset building program at the New America Foundation, and I'm here with Jeff Lubell who's the Executive Director of the Center for Housing Policy. He's one of the country's foremost housing policy experts, and specifically he's looked a lot at how the federal government provides rental assistance to needy families. As we know, this is a big issue for many families with low incomes. Federal government also is devoting a lot of resources to this issue, but many families don't receive any support. We think it's important that we actively search for innovative policies that can help more families with housing needs, and we've worked together for the last couple of years on a specific idea to do just that. It's called the Rental Assistance Asset Account, and Jeff, why don't you tell us a little bit about how it works? Sure. Rental Assistance Asset Accounts are accounts that provide families who are living in subsidized rental housing with an opportunity to build wealth and also with a changed set of incentives so that they have maximum incentives to increase their earnings. And the way it works basically, families in subsidized housing at all times pay 30% of their adjusted income for rent. And these accounts are accounts that would rely on the existing rental structure, so we're not proposing any changes to the rental structure. But once families' rental payments exceed a set limit, then any additional rent they pay goes into an escrow account. So the bottom line is that if families increase their earnings above this set limit, they start to build wealth and they start to build assets through these rental assistance asset accounts. And at the end of some defined period, let's say three years or four years, whatever period we decide, they'll have the opportunity to access those accounts. And hopefully they'll have a lot of increased earnings to go along with it because they've had this incentive to increase their earnings because they get back this account that grows as their earnings grow. So the proposal doesn't change the existing rent formula. It uses it as a source of leverage for the family to build up resources over time. When I've talked about this idea to economists, they can't believe the current system because every additional dollar that a family earns, they immediately lose 30% of it to rent. And it's not a very effective incentive to get people exerting effort for work. So it works as a real disincentive. This would kind of change that around and align the incentives in the right way. The bottom line is that we need a strong incentive for families in subsidized rental housing to increase their earnings because that will not only help them, they'll be better off, but it will also free up money to help other families because the more that families are able to contribute due to higher earnings, the less the federal government needs to pay to support those families in rental assistance. The one point I would add about the 30% of income formula is it serves a lot of purposes. I mean, the main idea of the 30% of income formula is that we need to give more assistance to people who need it the most. So if you have very low incomes and you can't afford a big rent, we want to give you a higher subsidy. But if you have higher incomes and you can afford more rent, we want to give you a lower subsidy. So it does a lot of good things. The negative side of it, though, is that it may possibly create a disincentive for families to increase their earnings. And what our proposal does is it ensures that that negative incentive, if it exists, is mitigated by an equally powerful offset that will provide families with a positive incentive to increase their earnings. So now they are not only paying a rent they can afford because they're still paying 30% of their adjusted income for rent, but they also have an opportunity to build assets as their earnings grow. And I think this is also a good idea that housing authorities should care about as well. What are some of the ways that this would be beneficial to them? Sure. So there are a couple of reasons why it would benefit housing authorities. First of all, it provides an incentive for families to increase their earnings so that more of your residents are basically making more money, which means that the share of your resources on which you need to depend on the federal government goes down and so you have more reliable stream of income. Number one, number two, particularly if we structure the funding incentives appropriately, you'll be able to serve more families because particularly once the incentive ends, families' earnings will be much higher. You'll be paying much lower subsidy for each of those families and that will free up funds that can help other people. Right. So if this works as an earnings incentive, the rents will be higher and eventually housing authorities will benefit from that. But families can also transition to independence and they can serve additional families in their communities as well. Right. And this is really important. Right now, subsidized housing is a binary on-off system. You either have housing assistance or you don't. So if you're one of the lucky few that gets it, great. It's a fabulous, wonderful product that provides stability to people who really need it. But there's all these other people who don't. But there's no sense of moving through the system. There's no sense of a beginning, a middle and an end and a transition to market rate assistance. And what this program creates is an opportunity for families to make that transition, to have a planned period of asset accumulation that can help them prepare for the transition and then a period at the end after their incentive ends where they're not forced to leave but they might now have an incentive to leave because now they're making much closer to the incomes that they would need to pay market rents. And this isn't just a good idea. We feel like we've plucked out of thin air. It's based on an existing program called the Family Self-Sufficiency Program. There's a track record there. There's some initial data that shows it's quite promising as a program. There are some learnings. Do you think that HUD can draw on from that family self-sufficiency experience to implement something like this? Absolutely. The Family Self-Sufficiency Program has been around since 1990. It's being administered at over 1,000 housing authorities. It serves over 50,000 families. It's really a fabulous program and on its own terms, we think it ought to be expanded. There's lots of opportunities, we think, for building partnerships between housing authorities and other entities to incrementally expand these accounts. So imagine we could move from 50,000, let's say, to 100,000 without new legislation. This is something that HUD could do just by promoting the program better and by developing partnerships. But if ultimately we want to offer these types of accounts to everybody in subsidized housing, if you really want to take it to scale, then we do need to look at other models and particularly what's important about the rental assistance asset account model is that we believe it would ultimately be cost-neutral. In other words, we believe that the increased revenue that housing authorities and the federal government would gain through incentivizing increased earnings would offset the costs of providing the asset account for families that exceed a certain threshold of earnings. So ultimately, it'll pay for itself. The next step here, though, is it really needs to be tested. This is a big idea. It's a new idea. Before rolling it out for everybody in subsidized housing, you really want to rigorously evaluate it. And so the next step on rental assistance asset accounts is to find some housing authorities that really want to rigorously evaluate it and for HUD to appropriate the funds that's needed to go out and do that evaluation. Now I agree. It's a promising idea. I think there's a lot that HUD can do with it to explore its potential impact, to help families kind of build up their resources, their asset base, and make the move towards self-sufficiency. We've written about it in a paper called Taking Asset Building and Earnings Incentives to Scale and HUD Assisted Rental Housing. It's available on our websites. You can learn about the idea in greater detail and check out how it might work. Thanks for your time. Thank you.