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Remarks by Secretary Andrew Cuomo
FY 2001 Budget Briefing

Friday, February 7, 2000

Thank you very much. Good afternoon. First to Deputy Secretary Saul Ramirez thank you for the kind words, and moreover, thank you for the great, great work. I think the best thing that I have done as HUD Secretary is put together a first class team. I believe a team that is better than any other assembled. And Saul is quarterback of that team, has done outstanding work, and I want to thank him and whole team, thank you Saul. (Applause)

Today we're doing the budget presentation, but we're doing it a little differently, because we try to keep you on your toes here at HUD. We're joined by all 81 field offices via HUD technology. And they are viewing this presentation simultaneously with our viewing here. Many of your counterparts are in their local offices. The state coordinators are running those briefings. They'll also be participating in the question and answer period that follows. So it's a presentation that is going to simultaneously communicate this message right across the board.

This is a great message. The President did his budget and it is by far the best budget for HUD of the Clinton Administration. And as you'll see, it's the best in over 20 years. And in many ways today's budget is really a culmination of everything that we have been working for together for years now. And it really has come together in what I think is an outstanding proposal.

This is the cover of the budget book. And if there is a picture that tells the whole story, I think this is it. I just want to spend a moment giving you the context for this. I don't know how many of you remember, there was a New York Times Magazine story, October 1996 that was called, "The Year That Housing Died." And the story basically pointed to the HUD budget and pointed to the number of Section 8 incrementals, the number of new housing units being subsidized. The number of new Section 8 vouchers went to zero, and that prompted the story, the year that housing "died". That was the first time in history, housing history anyway, that the number of new units had actually gone to zero.

If you took that story and went to write it today you would say, change the date, and it would then be the story of HUD being back in business and the rebirth of Housing. And that chart on the cover tells the whole story: '95, '96, '97, '98 were all zeros. That was a terrible period for housing, for urban Development. We started to make progress in '99, we're back in the game in 2000, and now we want to take the game to a new level in 2001.

Three years ago, where we were we? Just think back, literally three years ago they were talking about possibly eliminating HUD. When they didn't eliminate HUD, when they didn't eliminate the building, they eliminated HUD de facto by bringing the incremental housing budget to zero. Everyone said at that time, well HUD was saved. The building was saved, the employees were saved, but the number of new units went to zero. So in many ways you left the building standing, but you took the mission from the building. We were criticized as dysfunctional. Waste, fraud, and abuse was pointed out.

But our position was, as Mark Twain said, rumors of my death have been greatly exaggerated. And we set about working to get back in business. And now when you talk to our partners on the hill, Chairman James Leach, our Chairman on the House side of the Banking Committee, says there is no doubt but that HUD is here and HUD is here to stay, and that we are making tremendous progress. Our Chairman James Walsh has been very supportive, Chairman Lewis before that has been very supportive, working in a bipartisan way. The GAO says we have made credible progress since 1997. We're not claiming management nirvana here at HUD, but we are back and we are working.

We started by laying a new foundation with a management plan. We were honest about the criticisms. As the Deputy Secretary said, we said, first we have to get our own house in order before we can build housing. We understand that, and we started from the ground up . A management overhaul, which has since brought us two Harvard Innovations in Government Awards. The independent auditors who have been in to review us since, David Osborne, Price Waterhouse and others - all of them will speak about the progress we've made from a management point of view.

And the management success translated into a mission success. All this management work was not because we want to be great administrative people. All this management work was because we are housers, because we are community developers. We knew we had to do the management before we could get to the mission, and it worked.

In the last two years you saw major program area increases. Higher FHA loan limits, who would have believed that this Department would have been successful in that. New housing vouchers, 50,000 two years ago and 60,000 last year. We have a new piece of public housing legislation after five years of not getting any legislation passed. Overhaul of the Section 8 program with the so-called Mark-to-Market changes, and the Mark up-to-Market changes. The house is built, and HUD, from a management point of view, is back in business. And we now want to take that to a new level, and literally want to take it to the highest level in the past 20 years.

The President's proposal for the HUD budget in 2001 would go from $26 billion to $32 billion dollars, a $6 billion dollar increase. Increases in every program. Every program in the Department would go up a total of $6 billion. The game plan focuses on four challenges. First, the affordable housing crisis, second economic development, third Fair Housing, and fourth, basically the overall context, which is safe and livable communities.

First, affordable housing, both rental and homeownership. As you all know, we have the highest homeownership rate ever, 66.8 percent and we should celebrate that success. But as you also know, we have so much further to go. And if housing in some ways is a success story, the true housing story is a story of great paradox and great success coupled with great need. 5.3 million families, highest worst case needs ever. 600,000 homeless every night. The Waiting in Vain report that we put out shows longer waiting lists across the country.

The number of new vouchers we seek in this budget is 120,000. To give you an idea of how that compares historically, the 120,000 would be the highest level going back 20 years, to 1982. 120,000 vouchers are double what we actually got last year - last year we got 60,000. They will begin to make up for the backlog that we have in affordable housing from the years when we were at zero production.

Don't kid yourself about those years. That great housing chasm cost us as a nation. When we weren't producing affordable housing during those years, we built up the demand and now we're working our way back. The total number of vouchers that would have been issued would be 1.5 million.

The division of the vouchers is: 60,000 for "fair share" vouchers, 32,000 for welfare-to-work, 18,000 for the homeless.

We stress vouchers, Section 8 vouchers as a way to provide housing. But Section 8 vouchers alone are not a housing program for this nation. They have their role to play, and for the most part they work very well, and they have bipartisan support. But you also need more. You also need to be producing affordable housing in this nation. There are many markets where they will tell you, they can't get people to take the Section 8 vouchers, or they don't have available units. So simultaneously we have to get back into the production business.

That's why we are proposing the first HUD production program in 17 years. What we would do is take 10,000 of the vouchers, couple them with the Low Income Housing Tax Credit, wrap the transaction with FHA insurance, and we believe we can produce 40,000 units that way.

So we would be back in the production business. Other ways to expand rental housing include public housing, of which Section 8 rental subsidies are a mainstay. And if the production units are a mainstay, so certainly is public housing, where we have invested in housing stock, and now we only need to maintain it and to improve it given the national asset that it is. The public housing budget will go to 3.2 billion, to 100 percent of PFS.

Hope VI, which is the transformation of public housing, would go to $625 million, up $50 million. The HOME Program will go up $50 million. The Voucher Success Fund is a program that works with the vouchers in markets that are having trouble making the vouchers work. This would make the vouchers more attractive.

To expand homeownership, FHA, which had it's best year in history last year - 1.3 million families insured - would develop a new ARM mortgage product which we think could reach about 55,000 additional families. Also, Housing Counseling will be raised.

The homeless assistance budget, which has been a priority from day one, simply put, goes to the largest level ever proposed, 1.2 billion. It is working, the homeless program, the Continuum of Care. Not just because it wins a Harvard Award, but you can talk to Mayors and County Executives and not-for-profits all across the country, and they will tell you it is working. They just need to do more of it, and this is the way to make it happen.

Senior citizen housing. There is tremendous discussion in this nation now about the graying of America, and its impact on the health care system. That's why Medicare is such a big issue, Social Security is such a big issue. Well, if health care for seniors is a big issue, then by definition housing for seniors has to be a big issue. If they have an issue of healthcare for seniors, it begs the question of where are they going to live, and that is why senior housing is so important.

Last year we proposed a different paradigm for senior citizen housing, basically taking the Continuum of Care approach. We want to stay with that approach, and raise the level of funding. Section 202 up $19 million, assisted living $100 million, service coordinators $50 million, and Intergenerational Learning Centers, which are Section 202 projects with child daycare centers located within the Section 202 facility. So we get the daycare centers, but we also have an activity for the seniors and the synergy between the two is magic.

The second challenge addressed by our budget is expanding economic opportunity. Urban development in the Clinton administration is called New Markets. The President worked on this last year, bringing attention to the places left behind under the New Markets Initiative. That is basically the economic development portfolio for HUD. We're focusing on medium-size cities and smaller cities.

If urban development in the sixties meant the big cities - Los Angeles, New York, Chicago - then the urban development focus at this point in history is more on the smaller, the medium-sized city that is having trouble making the economic transition. It's St. Louis, it's Hartford, it's Buffalo, it's El Paso. And then are the areas of historic poverty, be they urban or rural, central Appalachia, Mississippi Delta. And certainly the Native American Indian Reservations, which have some of the worst conditions that remain in the nation.

The point of the President's New Markets initiative is that we have this extraordinary economic success, but we also have a corresponding need that goes with that success. We celebrate 20 million new jobs, but that number doesn't mean anything unless you have one. We need a labor pool, we need the consumer markets. Those are the areas that are yet to be developed. The cornerstone of the New Markets Initiative is called APIC, American Private Investment Companies, $37 million . That is based here at HUD, it was approved last year, but it needs authorization. We believe it can create 200,000 new jobs.

The Community Development Block Grant Program, a mainstay of the Department. It goes up $119 million, but we also reduce the number of set asides so the effective increase is $250 million. The number of Section 108 loans would be $1.2 billion. The EDI Community Empowerment Fund is capital for distressed communities, it's an economic development generator, that will leverage $500 million in private loans We're asking for $100 million in direct grants this year.

Next is the Empowerment Zone Program which President Clinton began, literally in the first year of his Administration. The Vice President has been running it. We are requesting $150 million for 15 Round II Zones, $1.5 billion, ten new Zones, and extended tax credit to all of them. Build on the Empowerment Zone success, increase the number of Empowerment Zones and fortify those one we have already. And the Native American Program, we are requesting the largest amount ever, an increase of $37 million. You could do 10 times that and not make a dent, frankly.

Our third priority is to end housing discrimination. We have spent a tremendous amount of time in this area, in this Department, and I am proud for every hour, and I wish we had done 10 times as many. I believe the best thing we can do is to make sure we stand up to fight discrimination wherever we see it. We've been doing that, we've been bringing the cases, we've been using the bully pulpit. And we're making it clear that this nation has no tolerance for discrimination. But the groups, through the FHIP and FHAP programs also do great work for us and we want to increase that funding by $6 million dollars.

And the last point is, build safe and livable communities. The context for this, the template for it is livable communities, safe communities. First on safe communities. The Drug Elimination Grant Program works very well, and we want to increase it by $35 million. We have an idea for a new initiative, the Community Gun Safety and Violence Initiative, which will be another tack to fight gun violence, $30 million dollars. And then we have the Officer Next Door Program, and the Teacher Next Door Program, which sells FHA properties to police officers and teachers at a discount.

Smart growth is also the context for safe and livable communities. If this country realizes that we can no longer consume land the way we have been consuming land, you cannot consume more and more green space without consuming the planet. The only practical solution is to do that U-turn on the development highway and redevelop cities rather than continuing to develop suburbs. I believe the nation will come to that conclusion.

I also believe that it is easier said than done, and we're going to have to do some work to make that happen, that's regional connections. Helping the cities and the surrounding counties to work together. Helping them to overcome decades of distance and cultural barriers. That's why we need the Regional Connections, the Brownfields Initiatives, which says redevelop used sites rather than developing new green sites. You need to answer the questions about the obstacles to redevelopment: who is going to help clean up the land, who is going to assume the risk? That's the Brownfields Initiative, $50 million. The Lead-Based Paint and the PATH Initiatives would also both be increased, both of whom will help the environment.

The context for safe and livable communities is also new partnerships. Washington can't do this alone. We're going to do it with state and local governments, and we're going to do it with our new partners in the community --new not-for-profits, faith based organizations, universities. We've been doing that, we gave it a new focus with Father Joe Hacala's Center for Community and Interfaith Partnerships here at HUD. We now want to put some funding behind it. That's on the theory that you build on the assets in the community. The assets in this case are the faith-based communities. The assets are the universities that are there, that are now starting to tear down their walls and welcome the surrounding community, and we want to spur that kind of activity.

And now is the time to do it. We have a unique opportunity to do these things now. The stars in this constellation are lined up in a way they haven't been before, and I don't know that they will be again. You have, for the first time, a surplus. How many years did we hear about the deficit, and all the Federal revenue that had to go to reduce the deficit because that was job one. Well the deficit is now gone, we now have a surplus. How many years did we hear that we would love to do this, but HUD was part of the problem. And it would be nice to build housing except for HUD.

Well, HUD is no longer part of the problem. We have a tremendous need out there, we have a surplus. We have HUD that can be part of the solution and not part of the problem.

Now is the time to do it. And if you don't do it now, what you have to say, albeit implicitly, we are never going to do it. If you're not going to build housing now, if you're not going to redevelop cities now, if you're not going to get homeless off the streets now, if you're not going to fight discrimination now, the ruse is gone. You can't say you'll do it sometimes in the future, because there is no excuse.

There is no excuse. It either happens now or it doesn't happen. We have all the other pieces in place, we just need to bring this approach up to scale. We just have to get more resources to the groups who are doing it. We've done everything else.

And in some ways that's why there is going to be a very frank discussion this year, because there are no excuses to point to. Are we going to build housing, yes or no, as a nation? Are we going to get people off those waiting lists, yes or no? Are we going to get people off the street and out of the shelter, yes or no? And don't talk to me about the deficit, and don't talk to me about HUD's corruption, and don't talk to me about having the wrong approach.

There are no excuses - that's what we've accomplished. I believe when you strip away the excuses, the truth is so stark and so powerful, it's going to get us to where we need to go.

Our success is your success. The way this all happened, the way this Department rose from the ashes over three years, the way we got the FHA loan limits, the way we got the public housing legislation, the way we got the new vouchers two years ago, and last year, is by doing it the old fashioned way - by doing it together with the Congress, with the Mayors, with the Governors, with the builders, with the realtors, with the not-for-profits, with the advocates. You made it happen, and I want to say thank you, because it is an inspiring story to be part of, not just for the housing and community development workers and community, but for the nation. It is a story that has to succeed for this nation to get where it wants to go, and that's really the story we're telling today.

Thank you for listening. We're going to take questions, comments, queries from people here and in all 81 offices. And this team of very distinguished, facile, articulate Assistant Secretaries is ready to respond.

Content Archived: January 20, 2009

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