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Remarks by Secretary Andrew Cuomo
Economic Development Conference

Los Angeles, California
Tuesday, September 26, 2000

Thank you for the warm welcome. It's my pleasure to be here. It's a pleasure to join all of you. We have a raft of distinguished HUD officials who are here with us today. We're very excited to be here. It's worth your taking the time to get to know them while you're here.

These are the people who run the programs. They run the offices and sometimes putting a face with the name, putting a face in the case of HUD with a program acronym, which is how we communicate, is all the difference in the world. And they really are the engine that has driven HUD, which has done remarkable work, remarkable turnaround in four years. And these are the people who made it happen. I'd like to introduce them quickly so you get a chance to meet them through the day.

All of them are economic development generators. Every program official at HUD, whatever the specific program, job one is always doing the economic development generation, doing empowerment. We have the Assistant Secretary for Fair Housing, Eva Plaza who is with us today. We have the Assistant Secretary for Public Housing, Harold Lucas. Assistant Secretary for Community Planning and Development, Cardell Cooper, who you heard from this morning. The Deputy Assistant Secretary, who runs all the homeless programs. Even the homeless programs are economic development programs, Fred Karnas.

We have the Deputy Assistant Secretary who runs the Hope Six Program, which is the Public Housing Reconstruction Program, Elinor Bacon. And we have our in-house priest, which you need at HUD, certainly. (Laughter) You can never have enough priests, I always say, especially at HUD, who has developed the Center for Community and Interfaith Partnerships, which is what we've been talking about for the past two days. He's done a miraculous job to use a word, Father Joseph Hacala.

We are talking about economic development today. We're talking about bringing opportunity to places that have been left behind, sometimes for decades. This is not a recent problem. This is a generational problem and it shouldn't be underestimated. This is a heavy load that we are looking to carry here. And let's not underestimate the size of the challenge.

The overall national economy is going great guns. You hear all day long about how well the economy's going: 22 million new jobs, lowest unemployment rate in 30 years, poverty numbers are down, again. That is true. Net, this national economy is probably the best economy in the history of the nation.

It is so good that that's the story you'll hear day in and day out, day in and day out, 22 million new jobs, highest home ownership rate in history, 67 percent. I'm going to say that again because I want you to remember who the housing secretary was when home ownership hit the highest rate in history, 67 percent.

But it is a great story of national economic resurgence, the economy is doing great and we should celebrate that. But that is not in and of itself, the economic story of the nation, because while that is the bottom-line conclusion, while that is the net, you have a story of winners and losers, and you have some profound losers in this nation. You've just gone through a radical economic transformation, where you moved out of one entire economy and into a new economy. And that has not come easily.

I was in Long Beach yesterday. Long Beach was in the defense industry. That's what they did, they had a defense plant, they had a Navy yard, they did shipbuilding, McDonald Douglas, that was the economic identity of Long Beach; that's where the jobs came from, that's why people moved there. Overnight, the industry goes away, base closing commissions, because we're moving out of the defense industry. Now, what does Long Beach do?

Well, find a place in new high-tech economy. It's easier said than done. Cities like Akron, Ohio, they did one thing, they made tires in Akron. That was their claim to fame. You pull into the city, you go through a big tire when you pulled into the City of Akron. You go to the Chamber of Commerce, they have little tire lapel pins they give you. That's what they did and then overnight the tire industry moved to China. And now Akron has to find a new business.

My home state in New York, Buffalo used to make steel. Steel went out of business. And you have cities like this all across the nation that are looking for their new place in the new economy, but it is often much easier said than done. Two out of five cities in this nation, two out of five smaller, poorer, or who have crisis unemployment; what we call crisis unemployment.

So, overall it's a story of success, but you have stories of places left behind. You have, as you saw in the video, pockets of poverty in this nation as bad as they have ever been. You can go to Appalachia, you can go to the same county that Bobby Kennedy went to over 30 years ago and nothing has changed. You can go to Chicago, to the Cabrini Greens, the housing authority. Of the fifteen poorest census tracks in the United States, twelve of the fifteen are the Chicago Housing Authority. One housing authority, twelve of the fifteen poorest census tracks in the United States.

That was the young African-American girl looking through the grate. Nothing has changed. You go into that place and you talk about the new economy, they think you're from another planet, because there is no economy in that environment.

You can go to places in Watts and they will tell you nothing has changed.

You have two economies in the nation: A great story of success, a great story of need and with the need goes an opportunity. Recognize the challenge, recognize the size of the cart. The numbers in California tell the story clearly. Chico, poverty rate 28 percent; Santa Ana, 25 percent; Los Angeles 26 percent; Madera, 33 percent poverty. Watts 40 percent poverty. Same number as my home city, New York City. Wall Street, that's driving the whole new economy and within miles of Wall Street, you have 40 percent of the children in poverty.

That is the disparity that is the economy. And we have to make that story -- have that story told. Why? Because it says, number one, celebrate the good. But see the need. And, as a matter of fact, use the good, use the strength to invest in the places left behind because we do have a moment in history. And we believe we can help. And we're government and we're the federal government. And I know it's hard to believe that we believe we can help. But we can.

Now, when you say that, there are people who will say, hah! We heard this before, sounds like the '60s, sounds like the '70s, you're going to do economic development. It didn't work.

First it did work, to the extent we tried it. But second, to the extent there were lessons to be learned, we have learned them. And there were two very different approaches that were taken, neither of which worked, in my opinion.

First was what I would call the extreme conservative position. The extreme conservative position on these issues says, look, if the private market has bypassed an area, then there's nothing you can really do about it, because the private sector knows and the private market knows. And if the private market has bypassed an area, then the lord of the marketplace says that area should bypassed. If the private market didn't go into Watts, who are we to tell the private sector, you should go into Watts?

And the wisdom of the private sector will go unchecked. That's the extreme conservative theory. If you believe that, it means you lose Watts, you lose Akron, you lose Buffalo, you lose Toledo, you lose all those people in poverty. You lose the 40 percent of the children in New York City. And that will ultimately hurt this nation. Forget the morality of it; forget the ethics of it; forget the sense of community, it will hurt the nation economically.

You then have the extreme liberal position. That said, look, the private sector passed by this area, we, government should now come in and bring an economy with us. And government brought their own economy. You had their own housing economy, it was called public housing. We had our own income, people didn't work, but we had our own income system, we called it welfare, and food stamps. And this solution did not work. Why? Because when you displaced the private sector, you lost the incentives and the sanctions and the behavior that went with the private sector.

We say, the approach that works is this: Bring the private sector places that have been left behind and use government to facilitate that private sector entry. Because the private sector is not going to go to these places on its own. They already made that decision. They said they are not competitive for any one of a hundred reasons, that they're not competitive. Well, you make them competitive.

Do what you need to do to bring the private sector into these places. If it's by tax incentives, if it's by tax abatement, if it's a low- interest loan, do what you need to do to bring in the private sector, but always lead with the private sector. We don't want government programs that go in and substitute for the private sector, this is about private sector job development.

Ownership, ownership, ownership! Equity, equity, equity! Vest people in their community and in the process. Let them own the business. That's what this is all about. Do it on the economic side. Also do it on the housing side. Don't think of doing housing just on the rental basis. Ownership. Ownership is the key.

Ownership can work miracles. I did 300 units of rental housing in the Bronx, very tough area of the Bronx, at one time. And this was New York City, ten years ago, when the crime rate was much higher than it was. And I was in a tough part of the Bronx with this development and everything was stolen from this development. It was unbelievable, I never saw anything like it.

There was nothing that they couldn't steal. They would steal television sets, stereo systems. They would also steal park benches, trees from the courtyard, I mean.

It was a phenomenon. And there was one fellow who rented the apartment which was right above the only entrance to the complex. And he was out on disability, and he sat on his porch all day and all night, this man. And he knew everything that was going on in this complex. And I would go say hello to him, and I would ask him if he had any idea who was stealing all the stuff from the complex. But he never had any idea.

And I would say to him, you remember those five park benches that were over there? You didn't happen to notice someone walking out with a park bench under their arm, did you? And he would say, no, I didn't see any park benches going through here. We had put in new shrubbery, the shrubbery left the complex. I said, you didn't see a fellow walking out with a couple of bushes in his hands did you? No, I didn't see anything. I said, okay, thank you very much for the help.

We then opened another complex. We learned a little bit as we evolved as an organization and the new complex was in Brooklyn called Genesis Homes. Genesis from "The Bible." And here everyone had an equity stake in the complex. And they had an equity stake in the management company of the complex, they had ownership. This was theirs, they weren't paying rent to someone else. This was theirs and, literally, they had the management company. And we had very lengthy discussions on what ownership meant, because many of these people had never owned anything, and they had no sense of the appreciation or depreciation cost of maintenance.

And we went through the management of the complex and the laundry room door would be broken. And we'd come to the meeting and say well it cost now $300 to replace that door. And you own one one- hundred-and-fiftieth of this corporation, that means it cost you $2, or whatever it was. This was a radically different concept. Changed the behavior, changed the incentive, had a sense of pride. And it also was miraculous in what it could do for a person's eyesight.

This fellow, this fellow who did not see park benches and shrubs, could now spot at 150 yards a child who would step on the grass across the courtyard and he would yell out for them to get off the grass, otherwise he would have to pay for reseeding.

It changes the entire dynamic, of the complex of the community, of the neighborhood. That has to be the principle in everything that we do. It has to be from that community, for that community, with that community; private sector jobs, wealth accumulation, ownership, equity. Not other businesses from outside coming in, but growing business from within.

Using the private sector as the engine that drives the entire recovery, that's what every program we do does. The Empowerment Zones is the clearest demonstration of it. A place-based, geographic-based program. The EDI, Economic Development Initiative, program, where we will loan money to private businesses, leverage private-sector capital, bring the businesses in. 108 loan program, guaranteed loan, create jobs, do more job development. Hope Six, public housing reconstruction is an economic development engine. The faith-based programs are economic development engines. And think of housing as an economic development engine and ownership, ownership, ownership.

We're taking the Section 8 program, we just did this and you need to know about this. The Section 8 rental voucher program, 1.4 million families rent apartments in this nation with a Section 8 certificate, right? They rent, they've been renting for about 25 years. With a Section 8, you can rent an apartment, you can pay $500, $600 a month to a landlord to rent an apartment. We said, why limit the Section 8 program only to rental? Why don't you let a person buy a home with that Section 8 voucher? You spend $7 billion per year. Why on only rental? : Why not $7 billion used to build equity in their own housing?

We're now going to take that Section 8 rental voucher program and make it a Section 8 Home Ownership program. And use that funding to build housing.

This is the approach in every program and has to be the approach in every development.

Next point is, we are not asking and we are not in the business of doing charity. The federal government doesn't provide charity. I hope your organizations are in the business of providing charity. And we're not asking the American people for charity. The HUD budget today is about $30 billion. I'm going to go back to Washington after this conference to fight for a $6 billion increase. The largest increase in the history of the department, that's what's proposed by President Bill Clinton.

But I'm not going to go to the Congress and say, please give me $6 billion-worth of charity, because it's not charity. What I'm going to say to the Congress of the United States is have the wisdom to invest in this nation. Have the wisdom to grow your businesses. This is not just for us and our communities and our people, it's for the nation as a whole.

We have the solution that American business needs. What are the two elements that run American businesses? What is the equivalent, the economic equivalent of air and water? Workers and markets. Workers and markets. Where does American business get the workers and markets of tomorrow? We have them. The workers of tomorrow are the unemployed of today. You're looking for a work force, you're now importing skills from overseas because you can't find them in this country.

You will have businesses that will tell you stories all across the nation, they can't find the work force. They can't find the skills. They're stifled because they don't have the skilled work force. We have it. It's the young man in Watts this afternoon is the skilled worker of tomorrow. You want to grow American business and you need the workers, come see us. You need a new market? The way we explore new markets overseas, and we pay foreign countries to develop markets? We have the new markets. They are the communities that have been left behind right here in this country. Let's invest in them the way we've invested in the overseas.

So, we are not asking for charity. We're asking to have the intelligence to do an investment in this country. Any business would do this. Any business, when they have a dividend, that's the time to reinvest in their company. And this nation has the greatest dividend in its history. We have the greatest economic surplus in our history. It's the governmental equivalent of a dividend. Invest it back into the corporation to develop the assets of the corporation.

That's what we're asking. That's the job that we're in when we talk about economic development. That when you invest in these communities, intelligently, learning the lessons from the past. But when you invest, you will raise us all. You will raise us all. We're not asking to pull down those that are already doing well. We're asking to lift up those on the bottom.

And when we lift up -- when we lift up those on the bottom, we will all benefit. And for anyone who thinks that this nation is at its strongest; anyone who looks at that Dow Jones and says we can't do any better than this doesn't know this nation and doesn't know its potential. And doesn't know the places and the people who have been left behind, who have God-given gifts and talents that can serve themselves and their families and this nation in a way that we have not even begun to realize and what our vision says is not a selfish vision. It's not an isolated vision. It is an optimistic, inclusive vision.

We want better for the nation as a whole, because we can do better as a nation, as a whole. You think we're doing well now? Man, you ain't nothing yet. You just wait.

You just wait until we now take the initiative to invest in the places left behind and we bring all our brothers and sisters onto the table, onto the playing fields, we have a lot of talent you haven't even seen yet.

We have a lot of young people imprisoned in public housing all across this nation who have not been educated. Who have not been embraced, who have not been empowered.

You have 20 percent of your children still, today, in poverty. Imagine what you can do with them when you liberate their God-given talents and you bring them to your bosom. We have women all across this nation who have not been in the work force they way they need to be. We have women in this work force at 73 cents to a man's $1.00, it's not right. Wait till we take our women.

And we say to our women, you can go as high as your dreams will carry you. The glass ceiling is shattered once and for all. We're going to bring our women in and explore them and exploit them to the maximum of their potential.

We're going to take the young boy in Watts and the young girl on the Pine Ridge Indian Reservation that you saw on the video and we're going to make them a full participant in this great country, American. Then, you're going to see success. And then you'll see this nation doing better than it has ever done before. You're going to lead the way. You're going to lead the way. Bring you energy, your initiative, your talent, invest in those communities. Let them flower, let them blossom, let them do well for themselves and lift us all and you will show us the way.

Thank you and God bless.

Content Archived: January 20, 2009

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