Prepared Remarks for Secretary of Housing and Urban Development Shaun Donovan at the National League of Cities Congressional City Conference

Washington, DC
Tuesday, March 17, 2009

Thank you for welcoming me here today.

I especially want to thank and recognize the National League of Cities President Mayor Kathie Novak, who serves as the mayor of Northglen, Colorado. I'd also like to thank the National League of Cities Second Vice President and Charlotte Councilmember James Mitchell for his introduction and welcome.

First of all, I want to say that the members that comprise the National League of Cities do vitally important work on the ground as elected leaders and city officials to ensure that American families lead fulfilling and stable lives in vibrant communities. That goal is embodied in the partnership between HUD, state governments, and local governments, and that is why there is no more important time than now for local leaders and HUD to join forces to maintain community revitalization efforts as we weather this economic downturn.

While we are without a doubt in a housing crisis, I believe strongly that in crisis, there is great opportunity, and this crisis gives us the opportunity to think together about what this crisis can offer us and where we can go from here.

As President Obama outlined in his speech to Congress, we need to obviously address the crisis in the short term but also must look ahead and deliberately plan for where we want to be in the future. Today I'd like to talk to you about the short term: HUD's role in the Recovery Act, as well as HUD's leadership in the Housing Plan. And I'd like to talk to you about the future: how HUD will rise to the challenges of our world today and form a dynamic, responsive partnership with state and local government, as well as local housing and community development agencies. Today I'll share with you the vision I have for achieving that partnership and how I see HUD turning our current crisis into a real opportunity for growth, innovation, and reform.

First of all, I want to emphasize that HUD's work to address the housing crisis in the short term is one leg of the three-legged stool that comprises the President's comprehensive plan to address this economic crisis. I view these three legs- the Recovery Act, the Housing Affordability and Stability Plan, and Secretary Geithner's Financial Stability Plan- as inextricably linked.

The Recovery Act works to increase jobs and promote homeownership; the Financial Stability Plan Secretary Geithner has talked about helps to stabilize the credit markets, also stimulating homeownership; and the Housing Plan is the third leg that helps keep families in their homes, giving them more options to prevent foreclosure.

In terms of housing, the Recovery Act makes a substantial investment- $13.6 billion- in housing and community development programs administered by our Department. These investments in HUD programs will be not just swift, but also effective; they will generate tens of thousands of jobs, modernize homes to make them more energy efficient, and help the families and communities hardest hit by the economic crisis. It's also important to note that within a week of the signing of the Recovery Act, here at HUD we had already allocated 75% of HUD's funding.

The Recovery Act makes significant investments in programs that will help local housing advocates on the ground promote energy efficiency and create green jobs. In recognition of the need to provide rapid relief to families affected by the current economic crisis, HUD has announced the award of $2.985 billion in Capital Funds to public housing agencies participating in the public housing program throughout the nation. This funding will enable local agencies to undertake energy-efficient modernization projects and make large-scale improvements to public housing developments.

By the end of this week actually, HUD will have signed contracts with every public housing agency in the country to use these funds and put them to work to improve energy efficiency, modernize, and create new jobs. Additionally, we're working to competitively award another $1 billion to local housing agencies to support catalytic investments, particularly investments that leverage private sector financing to retrofit public housing and enhance energy conservation. Notice of the availability of these funds will be published in late April and the funds will be dispersed in early September.

To advance energy efficiency, HUD has formed an exciting new partnership with the Department of Energy that will streamline and better coordinate federal weatherization efforts to make it much easier for families to weatherize their homes and spur a new home energy efficiency industry that could create tens of thousands of jobs. Working together, our two departments will coordinate our efforts under the Recovery Act to ensure that Recovery Act funds help build a home energy efficiency industry in the U.S.

In addition to saving and creating jobs, this partnership will help make our affordable housing stock, as well as all housing, energy efficient. These recovery funds provide a historic opportunity for our two agencies to work together to accelerate deployment of energy efficient and green building technologies in millions of homes, and at the same time to help create a highly qualified, highly trained, and high-performing workforce. We will also work together to provide guidance to public and assisted housing, which will assist the nation's 3,300 housing authorities on how to use Recovery Act funds to go green" through sound energy efficient building practices. These funds and this partnership will directly impact the work that NAHRO does on the ground.

Additionally, $510 million will be invested in modernizing and renovating housing maintained by Native American housing programs and $100 million will be invested in lead-based paint hazard reduction.

The Recovery Act will also help state and local agencies unstick developments frozen by locked tax credit markets, accelerate shovel-ready community development and affordable housing projects, and bridge long-standing funding gaps in our programs. $2.25 billion will also be invested in a special allocation of HOME funds to accelerate the production and preservation of tens of thousands of units funded by the low income housing tax credit. And $2 billion will be invested in full 12 month funding for Section 8 project-based housing contracts. This funding will enable owners to undertake much-needed project improvements to maintain the quality of this critical affordable housing.

I'd also like to say that in the face of an economic downturn, housing vouchers are a very effective tool that help very low-income families, the elderly, and the disabled afford decent, safe, and sanitary housing in the private market. While we need to work to improve the program here at HUD and are committed to doing so, they should not be forgotten as we work to fix the housing crisis.

The Recovery Act will also help the communities and families who have borne the brunt of this economic crisis, reviving imperiled neighborhoods and protecting families from homelessness. First of all, $1.5 billion will be allocated to the emergency shelter grant program to try and prevent homelessness in the most extreme cases of foreclosures.

HUD is also allocating nearly $1 billion to state and local governments through the Community Block Grant Program, a program that state and local governments help administer. This will enable your membership to invest in rehabilitating affordable housing and improve public facilities, helping to stabilize communities and create jobs locally. $2 billion are also going to into the Neighborhood Stabilization Program. These funds will help mitigate the impact of foreclosures through the purchase and rehabilitation of foreclosed, vacant properties in order to create more affordable housing and renew neighborhoods devastated by the economic crisis.

The Recovery Act provides a series of challenges to HUD and our partners like you: to obligate and spend resources quickly and effectively; to adhere to the highest levels of transparency and accountability; and to use this Act as a vehicle to both streamline and simplify our programs, as well as lay the groundwork for new markets and new ways of doing business. With much at stake, the Act provides for unprecedented levels of transparency and accountability so that you will be able to know how, when, and where your tax dollars are being spent. Spearheaded by a new Recovery Board, this Act contains built-in measures to root out waste, inefficiency, and unnecessary spending.

Here at HUD, we've moved very quickly to ensure that the Recovery Act money is allocated to your agencies, and in return, we will demand to know what results are coming from these funds. In this time of crisis, the American people really deserve to know that their money is being spent wisely and reaping returns that will directly benefit their communities and their lives. Together we can provide the transparency and accountability that the Act demands of us.

The Recovery Act will work in concert with the President's Housing Plan, which is critical to the health of our nation's housing market and to the ability of American families to stay in their homes.

I know that you understand the severity of the foreclosure crisis, but let's make clear how serious the problem has become. Realtors note that 45 percent of sales in December 2008 were distressed sales. Fourth quarter 2008 Mortgage Bankers Association shows that nationally, 6.3% of mortgages are in foreclosure or 90 days or more delinquent. RealtyTrac data shows three metro areas approaching 10% of total housing units in foreclosure at the end of 2008: Stockton, CA at 9.5%, Las Vegas, NV at 8.9%, and Riverside/ San Bernardino, CA at 8.0%.

The Housing Plan will make help available to as many as 7 to 9 million homeowners who are fighting hard to make their payments and stay in their homes. The plan will not provide money to speculators. It will target support to the working homeowners who have made every possible effort to stay current on their mortgage payments.

Just as the Recovery Act works to save or create 3 to 4 million new jobs and Secretary Geithner's Financial Stability Plan works to get credit flowing, the Housing Plan will support a recovery in the housing market and ensure that these workers can continue paying off their mortgages.

There are three major planks to the plan that I'd like to share with you. We will protect housing opportunities for all Americans with a $200 billion boost in our financial commitment to Fannie Mae and Freddie Mac. We will also commit up to $75 billion to help an additional 3 to 4 million homeowners who are at risk of foreclosure modify their unaffordable mortgages into affordable ones- keeping them in their homes and preventing neighborhood decay and the falling home prices that result from nearby foreclosures. And finally, through new guidelines for refinancing at Fannie Mae and Freddie Mac, we will offer assistance to as many as 4 to 5 million homeowners who can't otherwise take advantage of today's historically low mortgage interest rates because, through no fault of their own, their falling home values have made it possible to qualify for refinancing.

It is important to also stress that implementation of both the Recovery Bill and the Housing Plan will require a multi-jurisdictional response and collaboration between HUD and our local partners on the ground, including your membership at the city level. The President has set this tone of collaboration from the minute he took office in January, and I will promote the same collaboration here at HUD. As I said before, we are all partners in addressing the housing and economic crises.

At HUD, we are increasing our collaboration with other federal agencies on these critical issues, and I hope to see the same collaborative response from the organizations that comprise NAHRO and beyond. While this collaboration will be particularly important now, on the implementation of the Recovery Act, it must continue into the future.

In terms of federal-local collaboration on disaster housing, one example I'd like to mention are the nearly 200 public housing agencies that stepped up in the last couple of weeks to help HUD provide housing to families that would have otherwise been homeless or had a severely increased rent burden. Within days of my confirmation, I learned that thousands of families would be adversely impacted by the ending of the Disaster Housing Assistance Program at the end of last month. I announced the Transitional Housing Program and I put out the call for your help; and you responded. This was renewing of the commitment that you displayed throughout the operation of DHAP. Altogether, nearly 350 public housing agencies assisted in serving over 31,000 families displaced from their homes by hurricanes Katrina and Rita. We at HUD truly appreciate your efforts and will rely on this kind of continued partnership in responding to future disasters.

Our strong partnership will also involve HUD coming to you in your communities across the country, to discuss the housing crisis and how our work will impact the lives of families in your cities and states. Currently, we are in the beginning stages of planning three regional conferences around the implementation of the Recovery Plan. We will share best practices, serve as a resource, and collaborate on implementation.

While both the Recovery Act and the Housing Plan are positive steps forward, you and I both know that further legislation will need to be implemented down the road and that these two plans are not the be-all, end-all solution to the challenges we are facing. I will need your help going forward to make sure that future reforms make it through Congress.

In the face of an economic crisis, a foreclosure crisis, and a national housing finance system that demands repair, HUD will rise to these challenge, and reaffirm our commitment to making quality housing possible for ALL Americans. Again, we must view these crises as opportunities to grow, innovate, and reform.

Our mission and vision for the future at HUD encompasses working to: catalyze the market for energy-efficient homes; develop communities that are livable, walkable, and sustainable; plan with housing and transportation in mind, giving families the choice to live closer to where they work and cut transportation costs; and create a geography of opportunity for all Americans.

I'm very happy to say that I have asked Ron Sims to be Deputy Secretary. Ron is the county executive of the 13th largest county in this country, King County, which includes Seattle, Washington, who has been one of the great leaders, nationally, in his effort, of linking housing, zoning, transportation. He will lead the new Office of Sustainability here at HUD and help us generally look forward to the future.

As we strive to achieve our mission, we will be a center of governmental reform and renewal in the Administration. Specifically, we have to remember that at the heart of the mortgage crisis was a substantial failure of the nation's regulatory system to identify predatory lending schemes before they got a foothold in communities. Even as dust settles on today's crisis, HUD, along with the Administration, is committed to comprehensive regulatory reform. In the long run, this comprehensive reform should enable local government agencies to more effectively carry out their work.

At HUD, we will invest at an unprecedented level in research and evaluation. We will hold ourselves accountable to a standard that has never been imposed before on the work that we do. In the end, we can never, all of us, advance the agenda that we have for building more resources, for increasing the commitment this country has to decent, affordable housing, if we can't demonstrate that by spending more money in HUD's programs, we make a difference in people's lives.

And where we don't achieve what we think we should, with our programs, we will change. We will revitalize our policy department and research organization, and we will form broad partnerships with foundations, universities, stakeholders, and state and local agencies and government on the ground.

We will make a commitment together, I hope, to revolutionize the way we measure and evaluate our programs, and to the long-term research for those programs. We have an enormous opportunity at HUD to be more active, engage more and do more, and change the way government does business. But this opportunity will not come again, and we will need and expect your engagement and support on the local level to take advantage of this opportunity and plan for the future. We look forward to working with you.

Thank you.