Reinvention

by Secretary Cisneros
June 29, 1995

HUD has proposed to radically overhaul the Federal government's relationship with America's communities. There are three components of this reinvention. Sweeping Program Consolidation

HUD proposes to consolidate 60 major HUD programs into three performance-based funds:

The Community Opportunity Fund (COF) will stimulate community revitalization. All current HUD grant programs for community economic development--including Community Development Block Grants (CDBG) and Economic Development Initiative grants--will be consolidated into this fund. Localities and States will have broad flexibility to use resources to stimulate business growth and expand job opportunities in distressed communities.

The Affordable Housing Fund (AHF) will support production and rehabilitation of affordable housing. All current HUD grant programs for production and preservation of housing for low- and moderate-income households will be rolled into this fund, which will be administered by local and State governments.

Housing Certificates for Families will provide direct assistance to low-income households for affordable rental housing and for homeownership. All current public housing, assisted housing, and Section 8 rental assistance programs will be combined into this certificate fund, which will be administered by public housing agencies (PHAs).

Transform Public Housing

Second, HUD proposes to phase out direct subsidies to public housing authorities. Instead of subsidizing buildings and bureaucracies, HUD would provide direct assistance to residents who would be able to make their own choices about where they live. This approach would force PHAs to compete with private landlords for subsidized and unsubsidized tenants. When this transition is complete, public housing will be indistinguishable from conventional housing, and it will be a true asset to communities.

Create a Federal Housing Corporation

HUD will transform the Federal Housing Administration into a business-like, government-owned corporation: the Federal Housing Corporation (FHC). FHC will transform today's FHA into a results-oriented, financially accountable operation while ensuring its capacity to continue serving the homeownership and affordable rental needs of people and places that the private sector leaves behind. It will utilize the strengths of private market partners to expand homeownership opportunities. The new corporation will continue to serve the needs of working families who require low-downpayment loans, and residents in central cities, older neighborhoods, and other underserved markets, and develop more affordable rental housing.

The reinvention proposal will transform HUD from a lumbering bureaucracy to a streamlined partner with State and local governments. Significant downsizing is anticipated, reducing HUD's current workforce of 12,000 today to fewer than 7,500 employees. The current 80 field offices will shrink to roughly 60.