As prepared for delivery. The speaker may add or subtract comments during his presentation.

Introduction

Thank you, Steven [Steven Norman President, CLPHA] for the kind introduction. And let me recognize the Foundations - Kresge, Robert Wood Johnston, MacArthur and Bill & Melinda Gates -- involved in making this summit possible and for the fine work they are doing.

And I want to thank you for your support of Hunter Kurtz, the President's nominee to be Assistant Secretary for Public and Indian Housing.

CLPHA has once again taken the lead in bringing hundreds of participants from the public and private sector together, with the common goal of improving life outcomes for low-income people, especially children.

Of course, we may not always totally agree on the best way to reach that goal. But we can surely agree that the challenges we face in the public housing space requires a more robust and innovative approach - that we cannot simply sit still and remain as rigid as those ancient Chinese terracotta warriors located downstairs.

Breaking Out of Dependency

I have recently been on the road for several days, from talking to families at an opioid drug rehabilitation center to visiting a rental assistance demonstration project. One common takeaway from my travels, is that the families and communities we serve want to break out of the cycle of poverty that keeps them bound to dependency.

As some of you have heard me say before, at HUD, we define success not by the amount of money we pour into our programs or the number of people we provide housing, but by the number of people we help graduate from our services and become self-sufficient. Only then can we begin to help others in need of our resources.

It may seem hard to believe, but we are amid a major transformation in the way we tackle our challenges. It will take time, it will not be easy, but in the end, I think we will reinvigorate HUD - both in its mission and programs. And I want all of you in the audience to be a part of this positive change.

Let me add here a brief note on HUD's mission statement. There has been some very "creative" news coverage that we are considering dropping our anti-discrimination language. This is far from the truth. We are NOT backing away from any of the facets of the Fair Housing Act in our mission statement. We are in the process of discussion and have even sought feedback from outside the Department, which is a first for any federal agency.

We know that the current model of public housing is unsustainable - in both dollars and common sense. That's why:

• We're working with public housing authorities to convert public housing assistance to vouchers.
• We're looking at voluntary conversions of our nation's housing stock so assisted families and others can own their own units.
• And we're spurring greater economic opportunity by connecting public housing residents to job training, education, and healthcare -- among other services -- through our Envision Center Initiative. I know that some of you in this audience are engaged in our Centers and I hope more of you will join us.
• Finally, we are modernizing and streamlining existing rental assistance programs.

I understand that some of you would now prefer that I talk about federal interagency partnerships, data sharing, or childhood health and education - which is dear to my heart. But I want to center my remarks on rent reform, as that will help transform all we do by opening new paths to independence and access to quality and affordable housing for our tenants.

Counterproductive Rental System

As you have no doubt heard, we have recently proposed a set of rent reforms to improve the way we assist the more than 4.5 million families we serve. And every year the costs involved in our rental assistance programs continue to grow in budgets, ineffectiveness and complexity.

The rent structure, in fact, hasn't been addressed in decades and must reflect the realities of today's demand for affordable housing -- and for our residents to graduate out of public housing and into self-sufficiency.

This is a necessary conversation and one that is way overdue.

It's time to bring all parties to the table and further drive the dialogue regarding how we can best house, assist, and ultimately move families out of dependency. There are many positive innovative and responsive ideas being floating around town on this issue. I know that Congressman Dennis Ross of Florida will be soon be introducing his legislation to further this debate.

It's no secret to anyone in this audience that the current rental system is counterproductive.

Especially troubling are the unintended consequences of the way we now calculate the level of assistance - how it can hold back the very people we're supposed to help. They dissuade families from earning more income, reaching self-sufficiency, even marriage.

The current rent system, combined with other welfare policies, discourages the inclusion of family members with incomes. Husbands and fathers are not encouraged to live together or fully participate in their families' lives -- all because this would lead to a sharp increase in rent.

Not only is the current system unfair to tenants in public housing, but to everyone involved. Unfortunately, it's a lose-lose proposition. We all know how dense and complicated the system is: PHAs, owners and residents must monitor and record more than 40 different sources of income - from figuring out future incomes to recording detailed medical, child and other mandated information.

It's a perfect storm of paperwork that is incredibly burdensome and often creates confusion along with errors.

Let me pose these questions: Is there a tenant, housing authority or policy maker who hasn't been perplexed? Or can make perfect sense of the rental system we have had in place for decades?

A recent HUD study found that each year nearly 25 percent of rents charged to HUD-assisted families are miscalculated - resulting in $750 million in improper rent payments. In anyone's book of business, this is real problem.

Making Housing Affordable Work Act

Let me just mention several details of our Making Housing Affordable Work proposal:

First, we are proposing a new simplified "core rent" structure that is far easier for both landlords and tenants to understand -- and one that would translate into real savings in less paperwork and more income for tenants. As many of you are aware, the current system with it's many deductions and exemptions can have similar situated tenants paying vastly different rents for identical housing. It is simply not fair.

What is especially unique in our proposal, is that housing authorities and owners would now only be required to verify income every three years rather than annually. While this would ease the administrative burden for all concerned - as tenants are required to surrender vast amounts of personal information each year -- it would encourage residents to increase their earned income. No longer would a minimum wage hike or an extra job negatively impact an annual household's rent for three full years..

No one is well-served by today's highly confusing rent rules, particularly tenants who are "taxed" each year when they earn more income in the form of higher rents.

Any way you look at it, the proposal provides a new incentive to earn and save.

Second, we are proposing to create a menu of "choice rents" that housing authorities and owners may implement, as well as allowing them to develop their own rent structures - all to promote greater flexibility and especially local control.

We have learned from our Moving to Work demonstration program, that alternative rent structures may indeed work better in some communities. I'm talking about steeped, tiered rent structures or Family Self-Sufficiency escrow programs - all of which help drive tenant self-sufficiency.

On a regular basis we work and talk with local partners - both PHA's and property owners -- who have good ideas on how to best encourage residents on the road to independence. So, rather than force all residents into a one size-fits-all system, we will offer choices and grant waivers to allow innovation and experimentation.

Third, our proposal will help ensure fiscal sustainability. To assist just the same number of households, we are continuously having to go up to Capitol Hill and ask Congress for budget increases. If we seriously want to ensure adequate housing assistance for the next generation - and today only one in four families who qualify for HUD assistance receive it -- we must transform how we have been structuring our rental assistance programs.

Clearly, business as usual and decades old rental formulas will not get us where we ultimately need to go. We must provide meaningful, dignified assistance to those we serve without hurting them at the same time. And let me add that the rent reforms will NOT increase rents paid by the elderly and disabled households we currently serve.

Conclusion

In closing, please remember that this is only the first step on the road to reform. It is a proposal that is intended to start a necessary conversation on the reforms that need to be made on the current rental structure. In the coming weeks and months, we will be working with all our stakeholders, our HUD-assisted families, and Congress to further this conversation on housing assistance.

Whatever the final legislation, this much is certain. The current system is not working for the best interests of millions of families and communities. Remaining frozen in time, like those big statues downstairs, is not an option.

I look forward to working with all of you on the front lines of assisting our country's more vulnerable families.

Thank you again for the invitation to join you and for all you do.

END

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