SECRETARY CUOMO: Thank you. Thank you very much. Thank you, good morning.

AUDIENCE: Good morning.

SECRETARY CUOMO: How are we doing this morning?

AUDIENCE: Great!

SECRETARY CUOMO: Are we ready for a great few BOP days? (Laughing) We had a great session last year, with the BOP session. I think a lot of what we did got catalyzed in those few days. And as Saul [Deputy Secretary Saul Ramirez] said, we are at a new level, and I think these next few days are going to take us to a higher level. And I look forward to it and it's my pleasure to be able to welcome you to the beginning of it.

First, I want to begin by thanking you, because you have done extraordinary, extraordinary work since the last time we were together. A lot of hours, a lot of tedious, a lot of tormentuous change. But we really have brought this Department to a different place, and a new level, and the thanks go to each and every one of you who made it happen. And let's give each other a round of applause. (Applause)

I also want to thank the leadership team that we have put together here headed by Saul. And Saul very much epitomizes, I think this team, which is a different type of team. I was thinking about it this past weekend at the United States Conference of Mayors, met down in New Orleans. And the U.S. Conference of Mayors is very much our primary client, right? The mayors are the main elected group that we work with. And getting ready for the USCM speech I was doing a lot of work on the mayors and the progress of the cities and we issued the new State of the Cities Report which you should take a look at, which is a very provocative document. And one of the points I wanted to make was, I wanted to talk about this new breed of mayor.

They talk about a new breed of mayor that's in the city. What do they mean by new breed of mayor, and I said it is a 'politician plus.' It is a politician plus a new level of professionalism, that's what the new mayors are. And I think that is one of the reasons that so many cities are doing well, because they have a new breed of mayor. They are politicians - they have to be, otherwise they wouldn't be elected, otherwise they would not be mayors, they have to run office.

So they have a political skill set, but these are very real technical professionals. They are not politicians at the cost of professionalism. They are not glad handers. You sit down with these new mayors, the younger mayors, they want to talk the details of CDBG and HOME, and how they can do this, and how they can do that. And that level of professionalism is bringing cities to a different place.

This leadership team headed by Saul has that new level of professionalism. First of all, Saul is the new breed of mayor and he brings that level of professionalism here. These are not the normal politicos. They are not the normal glad handers. They are not the normal superficial managers. These are people who have gotten, rolled up their sleeves and gotten into the details of HUD. Why? Because management is about details. You know, you're all managers. It's about people, it's about relationships. And sometimes it is easier not to engage them. Sometimes it's easier to skim over the tough issue.

But if you do that for too long, you let too many of those issues build up, then you have an organization in trouble, and that's where we were a couple of years ago. Saul came in, the whole leadership came in. Gayle Laster, Bill Apgar, Hal DeCell, Harold Lucas, Deborah Vincent, Elinor Bacon, they put their hands into it up to their elbows and we worked out these tough issues, these natty issues, and we're making a real difference.

And I want to thank Saul for his leadership, setting the tone, making the tough calls, making things happen. The new HUD would not be the new HUD without Saul Ramirez. Thank you Saul. (Applause)

And it is a new HUD. As we begin this week, think about how far we have come, because we have come a long, long way. This is a new HUD, we talk about it often, but it is undeniable. We changed the reality and the reality changed the perception. We talked about 'How do we change the perception of HUD.' Everybody thinks that HUD is this dysfunctional poster child for failed Government. How do you change the perception? Change the reality and the perception will follow. And that's what we set out to do in the assessment center, and the enforcement center, and the community builders, and the integrated financial systems, all of these things changed the reality. The reality then changed the perception.

Every, every objective source documents your progress. I don't care if it's GAO talking about the new annual performance plan that takes you to the highest level ever. If it's the first clean audit. Many of you weren't here, but Mr. Clean showed up right where I stand. A very big fellow, Mr. Clean, but he showed up to present us with our clean audit. All the management professionals who have come in and looked at us, all say this Department is in a fundamentally different place.

That does not mean we do not have our political critics, of course we do, and we always will, we always will. Because this Department is a little different than any other Federal department. It's very existent is a political statement. Think about it, this department says by its existence, 'we think we should help poor people, we think we should help cities, we think we should help poorer communities,' that is a political statement. And poorer communities, cities are also code words.

We then get below the code words when we do fair housing work. We should stand up for the minorities in this nation. That is a political statement. That's what HUD says by existing. And if people believe, "I don't want to stand up for minorities, I don't want to help the cities, I don't want to help the poor people, let them help themselves," then they have to be opposed to HUD's very existence, and some are. And that political debate will never go away, because our existence is a political statement, one that we are proud of, a political philosophy statement. So there are critics, surely, and they're never going to go away. But any objective source will document your progress.

Now are we done yet? No. We've come a long way: we have credibility, people know we're on our way, but we're not yet finished. I was watching a TV show the other night, because my wife is on vacation with my children, so now I have these hours in the evening I don't know what to do with. So I was watching one of these shows on automobile history, and they were talking about the history of the Corvette. Corvettes performed, late fifties, first Corvette, and then became an American tradition, really fascinating story of Americana.

But they were talking about how they introduced the Corvette, the first Corvette, they had this great idea. A fiberglass car, rather than made out of steel they were going to make it out of fiberglass, lighter, wouldn't rust, et cetera. Powered with a large engine and they had this new suspension. And they rolled out this prototype and everybody loved it, and it was innovation never seen before, captured the imagination of people. And magazines went crazy, all the reviewers went crazy. And the prototype was a big deal. And they had all sorts of orders for the prototype.

One problem, they didn't really know how to build a fiberglass car. They didn't really know how to build that engine. They didn't really know how to build the suspension. And the designer said, now that they were flooded with all these orders, well, we have to work out the details now. Yes, the details. Corvette went on to become today, still, an American icon.

We know what we have to do. We know the prototype, we are doing it. It is not done everywhere. You are in different places as an organization. It's very much of the new HUD, the new organization. Before you were always in the same place because you were very much a cookie cutter. Now you are in different places because you have different configurations and different manifestations in different offices across the country. Some have more problems, some of have fewer, some are making more progress, some are making less progress. But the challenge now is to do the details. Finish the details. Complete the 20/20. Bring it totally home.

Two areas that I would suggest frame your reference for the next few days. One, what does the BOP mean. First it means, 'work out the relationships among the offices, your office to the other offices.' All those synapses, all those connections, how your office relates to each and every other office. Second function, how do the public trust officers relate to community builders. First function of the office. Remember the model when we talked about Citibank. Citibank did everything everywhere, that corner bank had every function in it. Then Citibank did back office operations. We very much follow that model.

When everything is everywhere it is very simple. You need something from admin you walk down the hall and you get something from admin. You need something from multi-family you walk down the hall and you get something from multi-family. You need something from single family you take the elevator up and you go to single family. You now go to the organization structure that we went to - which we had to go to - where you have back office locations. Now you need something from admin you have to go to Texas. You can't go down the hall. Well, that's okay, now they have computers, they have telephones, we'll do it electronically. Yes, but that has to be worked out and the relationship has to be worked out, and the responsiveness has to be worked out. CPD is not down the hall, multi-family is not down the hall, hub, hocks, et cetera. All those connections, all those synapses have to work for your office to work, and no one can make them work besides you. There is no cookie cutter, it is up to you to make those connections work. And that's what the BOP Conference is about, making those connections work.

Second set of relationships is public trust officers and community builders. Remember the concept we had. When we started the reorganizations we had too many tasks to do and we did not have clear role definitions. So we said fine, we'll define the roles and we'll separate the tasks. Very basic distinction between program management expertise, PTO, customer relations, client contact, community builders. Very simple clear distinction.

Less clear when you get down to actual case specifics. Well, who goes out and does the homeless grant announcement technical assistance. Ah, now we have to work it out. But the overall role definition is very clear.

Also, in my opinion, inarguable, but that we needed, customer relations was a function we didn't do because we didn't have time to do it. A business that does not do customer relations will not long be a business, it's that simple. And when you need a reality dose, just think back to when they wanted to eliminate the Department of Housing and Urban Development.

Remember when they said, maybe we should eliminate HUD. I remember it because I was here. How many people showed up in your lobby of your building the next morning to protest the closing of HUD? How many telegrams did you get? How many letters did you get? How many phone calls did you get, saying 'I'm outraged, don't you dare think about closing HUD. HUD is too important to me, HUD is too important to my community, HUD is too important to my city, HUD is to important to my state, HUD is too important to my not-for-profit.' Where was the outrage, where were all our customers saying, 'don't you dare close HUD,' where were they? We have thousands of grantees under CDBG. Hundreds under HOME. Thousands under the public housing program. Thousands under the homeless programs, where were they? They were nowhere to be found.

Why? Because we hadn't cultivated the relationships. We hadn't developed the relationships. Why? Because we were doing other things, we were running the programs, and we were short staffed. Fine, we'll separate the tasks. Customer relations and public trust officers because you have to do both. You have to be there in the community. The relations between the community builder and the public trust officer is a new relationship, and relationships are not easy in life. Old relationships aren't easy in life. Frequent relations aren't easy in life. And I won't make any wife jokes at this point because they might be repeated to mine. (Laughing) But relationships are difficult. And this was a new one and it had to be worked out.

In most places it is working very very well. Ninety-eight percent of the places it's working very very well. But as I said, you are in different places geographically and organizationally. Some places it is still being worked out. And I had one conversation that finally brought it home to me, brought the situation home to me. It was a public trust officer out West somewhere, not to name a specific place.

And I was having a conversation with the public trust officer who was talking about this phenomenon with the community builders and where they fit, and where the public officers fit, and I could see in the public trust officer there was a tension in his voice. There was a tension in this situation. And I said, 'well, tell me what you're thinking, what you're feeling about the community builders.' And at first he was a little reluctant, so I said 'look, I come from an environment where the way we make decisions, the way we process information is through debate,' and I said, 'and you get both sides on the table and you hear it, then you make a decision.'

I said, 'let's play that game, that's not your specific thought, because, see, people don't like to tell me - as the Secretary - sometimes their specific thought,' I said make believe you are arguing the case. And the person said, 'well, why do we need community builders? We need more public trust officers, I'm running the programs and I could use more people to help me run the program, we don't need community builders.' And we argued it back and forth and I made the other case, I talked about the customer relationship and the HUD being eliminated and where was everybody. The HUD function, the synthesizer as the community builder, the person who could assimilate all the different programs going back and forth so each person, the PTO's could concentrate on their programs.

I talked about the infusion of new talent. You know, we have the longest employee tenure of any Federal department, 17 years average service, the longest of any Federal department. Why? Because we weren't getting the new hires. So I talked about the value of new blood in an organization for all of us, for all of us. It excites us all, we learn from the new blood.

I talked about the value of the community relations. Somebody coming in from the community who had the relations. Someone who had the current technical private sector expertise, who was fluent in tax exempt bonds, the best mortgage products that are out there. So we went back and forth, back and forth, at the conclusion of this the public trust officer said, 'well, I agree with that, I agree with that. But why did they have to come in as a 15?' Ah, the light bulb went off.

Sometimes it takes a while, but eventually it illuminates. I said, 'what do you mean why did they have to be a 15?' 'Well, I'm only a 14 and I'm going to be a 14 for life, and the community builder came in as a 15.' I said, 'well, this is an interesting issue, but it is a different issue than whether or not we needed the community builder.' And the person said, 'you're right. We do need the community builder. I understand the community builder, I understand the concept, but why did the person have to be a 15, I'm only a 14.' I said, 'well the 15, because then we could get the best talent out there, and the best talent helped us all. Because we got that new talent, came into the organization and fuels the organization, brought the whole organization up.' 'Yes, but why am I only a 14?' That's the issue.

It has nothing to do with the community builder. The community builder is an argument to make their case. PTO's who feel locked in at 13, 14 and no possibility of get to a 15, that is a different issue. The community builder coming in as a 15 was salt in the wound, salt in the wound, but it is a different problem from a PTO being locked in.

The light went off because I knew this issue when I was the Assistant Secretary at CPD. CPD will tell you and they told me as the Assistant Secretary, there was no mobility to the higher grades. And to get a promotion what you had to was go to a different program area. So we had a lot of people in CPD who were actually very happy, but you didn't have the mobility to the 13's, 14's, 15's and if they wanted a 15 they had to go to a different program area. That is wrong.

It has nothing to do with the community builders, it is wrong to do that with the public trust officers, because it takes the incentive out of the system. It takes the energy out of the system. If you don't believe you can advance in your position, if you don't believe there is a ladder of opportunity, you don't want to climb because there is no where to go. And if you don't want to climb you lose your energy. You lose your inspiration.

And we've said all along, for an organization to work, for management to work, the relationship has to work both ways. It has to work for the management of the organization, it also has to work for the employee. And if the relationship doesn't work both ways it doesn't work for either part. And we have to have that mobility, and public trust officers have to feel that respect. So we're going to do something about it, because it was an issue that should have been addressed heretofore.

What we're going to is this, and Saul is going to be talking you through the details over the next few days. We have about, give or take 400 community builders, 400 on a universe of 10,000. We are going to have about 400 grade promotions to the higher grades for program offices, PTO positions all across the nation. (Applause)

So we're going to take, we're going to go through the entire organization, we're going to take those senior PTO positions, which have been lifetime 13's, lifetime 14's, never getting to 15's, and we're going to bump up the grades. We're going to put more 15's into the organization in the program offices, more 14's into the organization in the program offices, more 13's into the organization in the program offices, so people feel they have that mobility and they can get to the top levels in this organization.

We're going to do it fairly, we're going to do 400 total, which is just about the same numbers as we have community builders. It's because I don't want that to be an issue, legitimate or not, I just don't want it to be an issue. I don't want PTO's to compare themselves to community builders or community builders to compare themselves to public trust officers, and feel that one of them came up short. Community builders and public trust officers are equal partners. They are flip sides of the same coin, you need both. They are different areas of expertise, no one is better.

So if we brought in 400 high level community builders, we're going to do 400 increases on the program offices. Four hundred in total, we'll do two hundred this year, two hundred the beginning of the next fiscal year. They'll be divided up among the program offices. They will be predominantly in the field, I hate to tell my headquarters brothers and sisters. But of the first 200 we're going to have 173 in the field, and 27 increases in headquarters. (Applause) Why? Because if you look at where the 15's are now, they are disproportionately in headquarters, that's not right.

If the community builders and the public trust officers are equal partners, then headquarters and field are equal partners. And we should make that equity and make that equity of opportunity balance public trust officers, community builders, and headquarters and field. And as this is an effort to restore parity and equity, so everyone feels good in the organization, we're going to do 173 in the field, 27 in headquarters. When we go to do the second 200 then we'll do a refined allocation, again, between headquarters and field and among the program offices, and we'll make sure that it's fair at the end of the day.

I believe that this, this alteration should remove the only obstacle/issue that I have heard out there from my travels. And I think it's going to take us a long way down the road. The HUD 20/20 by its very definition is, I would analogize to a design/build concept, design/build. When you go to build a building there are two ways to do it. You can go build, you can first design the building, do all the blueprints, all the architecturals and then start to build. It can take you two years to do all the architecturals, and the engineering drawings, et cetera. The two years costs you because you're paying mortgages, you're paying for land cost, et cetera.

So very often they do what they call a design/build. The do a design and they start to build simultaneously. And the design is just a little bit ahead of the actual construction. All the projects I did were design/build, not surprisingly. (Laughing)

The 20/20 is a design/build. When you do design/build you have to be adaptive, you have to be flexible. I say to my Assistant Secretaries all the time, don't refuse to hear an issue, hear the issue and resolve it, be flexible, be adaptive. If you see an issue address it. We heard last time we met about the unplaced issue. Remember the issue of the unplaced and what people felt about that word unplaced, and we resolved that. We have now heard what people feel about the community builders at the higher levels, and I think this parity issue will resolve that.

And then it goes back to you, and your responsibility, and you working out those relationships. How does your office fit with every other office? How do the PTO's work with the community builders? How do the community builders do the synthesis, the one HUD, the cross cut, the horizontal and the public trust officers focus on their program, their expertise and their monitoring. Those relationships can only be worked out by you on the local level.

We can't do that for you in headquarters. We can talk about it, we can highlight it, we can give you best practices, but it's up to you as the managers in the organization to make it happen. They talk about this type of management process as empowering managers, because it pushes the authority from a top down central command and control to local managers. This is empowering, it is also a radical shift for this organization. It is up to you in a way that it has not been up to you before. No one can make this work in your office unless you do, no one can do it.

But I am sure now more then ever before that we're going to take this 20/20 and bring it home to the full victory and the full success it is. Two things while you're here. Appreciate what you've accomplished thus far, because it has really been something remarkable, and figure out how to take the next step.

And the last point I want to leave you with is this, the question that I always return to whether it's when I'm in church or have a special moment is 'why, why, why do we do this? Why is this important? Why do we spend our time this way? Why are you here? Why did you choose this as a living? Why aren't you doing anything else that you could be doing? Why, why, why?' Well, first, all of this HUD 20/20 is good for you individually, because it fulfills you. You want to be able to use your talents in life to the best of your ability. You want to feel good about the place you go to work. You want to feel that you are learning and you're growing. That's why 20/20.

For the organization, because the organization - let's face it - was faced with possible elimination, that's not a good thing for us as members of an organization, so we did it for the organization. And we did it for the public service, we did it for the public service. And when you believe in the concept of public service it trumps the other two, it's not even close. Because public service by its very definition says it is bigger than you, nice that it's good for you, but public service says, it is bigger than you. And when you believe in the public service then you say, 'that's why: because it's the higher calling.'

And we've talked about public service and your accomplishment in making this department a vehicle for change. And what this department can do when you get a billion dollars extra in a budget because you made the department work, how many people you can help with that billion dollars, billion with a "B", that's real. Best budget in a decade, a billion extra dollars. Because we're doubling the number of fair housing cases, the enforcement cases. Making that statement about discrimination - that is real. And this department has done much better things because of what you've done.

But it has also gone, in my opinion, to a new level these past few weeks. We've said, 'vindicate the dream that we can actually do the things that we talk about and then you will unleash an avalanche of public support.' I've said to you until I'm blue in the face: people want to believe you, and they want to believe that you can do what you say you can do, because it is the best of their spirit, and the best of this nation, but they're afraid to believe you, because you've hurt them before. And they think that you've let them down before. And they did believe in these high hopes, and they saw their hopes dashed when public housing failed, in their opinion, or welfare failed, but they want to believe you. Let them believe you and you can really unleash a different movement.

Well, look at this now. You have the President of the United States who announced his New Markets tour, New Markets tour, the President will go to Gary, to places like Gary, Indiana, inner cities that have been left behind. Mississippi Delta, Appalachia, Indian reservations, poorest parts of the nation. Places where this President has never gone before. Bringing the big spotlight of the presidency to these places saying, we're going to make America work in these areas. First time President Clinton has ever done that. Talking about issues that he has never talked about before.

I can tell you it would not be happening if you hadn't done what you did here. You made it okay for the President of the United States to do these things. You made it okay. You restored the credibility of these efforts. You said, yes, we can go into poor communities and once again talk about dramatic social change and aggressive Government policy.

We can think big and we can talk big, and we can dream big, and we can hope big, and we can act big, and we go to the poorest census tract in this nation and say it doesn't have to be this way, we can do that again. And the President of the United States will do it again, because we proved it possible. We restored credibility. And my friends, that is quite an accomplishment, you did it, we did it, together we'll do more.

Thank you very much.