Dr. Ben Carson
Thank you, John.
And thank you to all those in attendance representing both the public and private sides of the "P3" equation. It's an honor to speak with you today about the third "P" - partnership.
At HUD, our mission is to ensure that every American has access to safe, fair, and affordable housing. But HUD cannot achieve this mission alone, being successful requires federal, state, and local governments working together with the private and non-profit sectors as a team.
America is growing like never before. The American economy is witnessing historic highs; unemployment is at historic lows; and new jobs are being created at an unprecedented rate.
At the local level, young people are flocking to our cities, older people are staying in cities, and entrepreneurs are creating new innovations in housing and technology.
As a physician, I can tell you the name for this phenomenon- it's called a growth spurt.
Growth spurts can be painful. Growing pains concentrate in the muscles around the bones that are getting bigger and stronger underneath. Although these muscles may feel pain, it is also a normal, healthy part of the growth process.
Today's rapid urban growth is causing urban growing pains - especially in the housing market. In many high-cost areas of our country, disruptions to traditional housing trends have contributed to affordable housing challenges. Many teachers, nurses, police officers and firefighters are struggling to find an affordable place to live in the very communities they serve.
Moreover, the limited public housing units available in major cities need considerable renovation and repair. Every coast and state are feeling the ache.
Any doctor would agree: it is not healthy for this kind of pain to persist.
Fortunately, there are exciting developments to overcome these challenges, as innovators, entrepreneurs, philanthropic organizations, faith-based communities, and governments at every level are starting to work together.
We are seeing partnerships form in communities across the country to help increase the supply of affordable housing and preserve existing housing stock.
Churches are creating affordable housing by selling their air rights or building affordable multifamily developments on unused land. Communities are launching plans, such as The BLOCK Project in Seattle, to change zoning laws and house homeless neighbors.
State and local governments are working together to examine outdated regulations, so more affordable housing developments can be built in high opportunity areas.
Innovators are creating new technologies that drive down the cost of building a home
Today, I'd like to highlight two significant public-private partnership initiatives we are promoting at HUD to help our fellow citizens and revitalize distressed areas in communities across the country.
HUD's Rental Assistance Demonstration - or "RAD" - program, and Opportunity Zones.
HUD recognizes the critical importance of protecting our country's existing affordable housing stock. Several years ago, we estimated the cost of repairing our deteriorating public housing stock and the price tag was a staggering $26 billion dollars!
In response, HUD created a public-private partnership called Rental Assistance Demonstration or simply RAD. RAD gives public housing authorities a powerful tool to preserve and improve public housing properties and to address the nationwide backlog of deferred maintenance.
RAD also gives owners of three HUD "legacy" programs-- Rent Supplement, Rental Assistance Payment, and Section 8 Moderate Rehabilitation-- the opportunity to enter into long-term contracts that facilitate the financing of improvements.
RAD allows housing authorities to "convert" their assistance to long-term, project-based Section 8 contracts. These new contracts provide a more reliable source of operating subsidy that allow PHAs and owners to safely leverage private capital - typically debt and equity - in order to finance the property rehabilitation or replacement. The contracts, as well as underlying use restrictions, must be renewed each time they expire, ensuring the long-term affordability of the improved properties.
Current and future residents are provided a robust set of rights and protections, including the consultation during the conversion process, the right to return to the property when repairs are completed, the right to organize and funding for organizing, and a right to move with tenant-based assistance if needed to move closer to a job, school, family, or other reason.
Further, HUD requires that a public or non-profit entity must always maintain a controlling interest in the property, even in the rare and unanticipated event of foreclosure, thus ensuring the long-term public stewardship of the properties.
Last fall, we crossed an important threshold by announcing that the RAD program has preserved 100,000 public housing units. These are homes that otherwise would have been lost from our affordable housing supply forever.
Not only is this program saving homes, it also has generated nearly $6 billion dollars in construction investment and created over 108,000 jobs.
Without RAD, it would have taken 46 years for housing authorities to do this. We are highly optimistic to build to such accomplishments, and we thank all our private sector partners as well as state and local officials who contribute to making the RAD program a proven tool for success.
The Trump Administration is also acting decisively to stimulate housing and community development financing through Opportunity Zones.
Specifically, the 2017 Tax Cuts and Jobs Act included the creation of a new investment program with unprecedented tax incentives for the private sector to invest in distressed, low-income neighborhoods designated as Opportunity Zones. Approximately 35 million Americans now live in the more than 8,700 distressed economic areas designated across the country.
Public-private partnerships are among the key reasons that the Department of Treasury estimates Opportunity Zones will attract more than $100 billion dollars in private investment.
Consider that the source for Opportunity Zone capital comes from corporate and individual investors who hold roughly $2.3 trillion dollars in unrealized capital gains. These investors are especially well positioned to make win-win investments that direct capital in ways that align with local governments' economic development needs.
For example, public-private partnership development projects could be aligned to finance workforce housing, government office buildings, high schools and elementary schools, teaching and research facilities, sports facilities, and even commercial office buildings that aim to attract private tenants in areas where governments want to see economic growth.
The public-private potential of Opportunity Zones is enhanced by their deliberate design to promote long-term investments. Only investors who commit capital for periods of five, seven, and ten years receive rewards. That long-term lens could make P3 deals especially attractive to private investors looking for stable, reliable sources of investment opportunities.
On the public side, because the Opportunity Zone tax advantages enhance the private sector's return on capital, it will be easier for local governments to arrange public-private partnership deals that previously fell just outside the private investors' expected return.
By aligning public need with private enterprise, Opportunity Zones help make sure that, "everyone does best when we invest in the distressed."
These are just some of the ways that HUD is embracing public-private partnerships to achieve our mission of ensuring safe, fair, and affordable housing for all Americans.
We often speak of the three "P"s, but there is a fourth "P" that our team at HUD always puts first: people. A P3's power is that the whole is greater than the sum of its parts. The same can be said of America: our strength comes from the millions of men and women from different places in different States, who stand together "United", indivisible and under God.
Thank you for being our partners. I look forward to your questions in the Q&A.
|Content Archived: January 7, 2021|