Good afternoon, good morning on the west coast. Let me make a couple of quick opening comments and then we'll take whatever questions you might have. I'm with Assistant Secretary Susan Wachter today, who is the Assistant Secretary for Policy Development and Research. And Gloria Cousar, who runs the Section 8 Program. So any tough questions I will refer to them. Any easy questions I will answer myself.

There are two sides to HUD, two basic functions that the Department performs, housing and urban development. Urban development is the economic development side of the housing, it's Empowerment Zones, it's jobs, et cetera. It's a major priority, we've done a lot of work there. But today we're talking about housing, which is the first order of HUD's business.

The story of housing, in a nut shell, is this. We have the greatest need for affordable housing in the history of the country, 5.3 million families, 5.3 million families with worst case housing needs. Why, that sounds incongruous - you have such a need for affordable housing, yet you have such a strong economy.

Actually you have the tremendous need because of the strong economy. The economy is so strong that it is driving up rents and people who are on fixed income, or at the bottom of the income spectrum, or whose income is not rising as fast as rents are getting priced out of the markets. Rents are increasing at double the rate of inflation, double the rate of inflation. So the rents are going up because the real estate market is getting hotter.

Within cities and rural areas, areas that were at one time were marginal are now being redeveloped or being gentrified, they are no longer marginal, the rents are going up, and the results is the highest need for affordable housing in history.

Well, how do we meet the need for affordable housing? We subsidize housing, that's the basic job of HUD. The way we primarily provide affordable housing is through something called the Section 8 Program. We also build new units under various programs. But the primary way is the Section 8 Rental Assistance Program. What Section 8 does is it gives you a voucher. A voucher is a piece of paper, you go to the private market, you rent an apartment, and the voucher subsidizes the rent. It was originally a Republican concept, and it is now the prime means of affordable housing production.

The Section 8 program hit a road block in 1995. The new Congress came in, went to eliminate HUD, they didn't eliminate the Department, but de facto they eliminated it by zeroing out the new Section 8 units. In '95, for the first time in history - the first time in history - the number of new units produced went to zero, '96 was zero, '97 was zero, '98 was zero, '99 we had a breakthrough where we actually got 50,000 new units under Section 8. Last year, in the year 2000, which is the budget that's just finished, we went from 50,000 to 60,000, which was a big win, especially since in this past budget both the House and Senate started with zero once again, and we came up to 60,000 at the end of the day.

The President announced last week that he was going to propose 120,000 new vouchers. This is double what we had last year. It would be far and away the most aggressive proposal of his administration. It is the most aggressive proposal in over a decade, the 120,000 vouchers. And, again, look at what it is compared to what we did. It's double what we did last year, and for four years basically before that we were at zero, so it's a very aggressive proposal relative to what we have done. It is a very modest proposal when you consider the need, because we need millions of units, and 120,000 is modest compared to the millions that you need.

The way the vouchers go out is basically by formula. We then run the formula and we can tell you what you would get in your local area, what you call the fair share distribution of vouchers is. You take the base of 120,000 and you run the formula against it. That is the local information you have. You'll see that while all areas of the country get more units, and will get more units than they have had in over 10 years, it still does not keep pace with the need. It is an exciting step forward, it's an exciting step forward, but it's a modest step.

I'll stop there. And we'll take your questions. I think, you know, if you look at the trajectory, FY95 zero, FY96 zero, FY97 zero, FY98 zero, there is a chart on the second page of the press release. In FY99 we went to 50,000, last year 2000 we went to 60,000. I think it is worth noting that the Department that at one time was in danger of elimination has been reinvented and now even the Republicans are willing to invest in HUD once again, and that's what the 50,000 and 60,000 was about, the 120,000 would take it to a new level.