Prepared Remarks for Secretary of Housing and Urban Development Shaun Donovan at the Los Angeles Press Conference

Los Angeles, California
Wednesday, April 8th, 2009

Thank you so much. It's great to be here in Los Angeles today along with my colleagues in federal, state, and local government to talk about the progress we've made on shoring up neighborhoods here in L.A. against the devastating effects of foreclosure. It's always refreshing to get out of our offices in D.C. to see what impact our programs and our funds are actually having on neighborhoods.

Today we're having a full day of discussions with local elected officials and housing experts and we've toured two properties that the Los Angeles Housing Department is in the process of purchasing through federal Neighborhood Stabilization Plan funds, one of which is where we're standing right now. We have much more work to do here in L.A. to mitigate the impacts that foreclosures have had on local communities; however, innovative collaborations between local government, housing agencies, and non-profits and creative, green-focused uses of federal funds have put L.A. well on the path to recovery.

I'd like to take a moment to recognize those joining me here today: Congresswoman Maxine Waters, Mayor Villaraigosa, and Senator Rod Wright who represents this district in the California State Senate. I'd also like to recognize County Supervisor Mark Ridley Thomas, Assemblyman Mike Davis, Assemblyman Curren Price, and Los Angeles City Councilwoman Jan Perry. Lastly, I want to recognize Yolanda Chavez, the executive director of the Los Angeles Housing Department.

On March 19th, President Obama was here in Los Angeles to talk about his Making Home Affordable Plan, but he also announced that California was receiving $145 million in Neighborhood Stabilization Program funds from HUD to provide additional help to communities hardest-hit by the foreclosure crisis. Housing prices here have fallen 20 percent in the past year, and you've got one of the highest foreclosure rates in the nation, so let me take a moment to talk about the Neighborhood Stabilization Program and what it has meant for cities like Los Angeles.

The Neighborhood Stabilization Program, known as NSP, was originally created under the Housing and Economic Recovery Act of 2008, and provided $3.9 billion to state and local governments to buy up and rehabilitate vacant, foreclosed homes and resell those homes with affordable mortgages. Congresswoman Maxine Waters, who joins us here today, actually was a sponsor of an early version of this legislation that created the Neighborhood Stabilization Program, and she has been a huge advocate and partner in promoting NSP and the good it can and will do for California neighborhoods.

This first round of NSP funds was allocated to state and local governments by formula, and the second round of funds will be allocated by competition. Just to give you a sense of the numbers, here in California, home prices dropped 41% over the last year as surging foreclosures drove down values. The NSP program is just one way that we're working to keep home prices from falling in areas of concentrated home foreclosure- and how we're starting to transform abandoned California streets lined with empty houses into thriving neighborhoods.

The house that we're gathered at today is a foreclosed property that the Los Angeles Housing Department is in the process of purchasing with its NSP funds. I should note that in January the City of Los Angeles received over $32 million in NSP funds, and I want to commend the L.A. Housing Department and its local partners for working so quickly and effectively to put these funds to work. Just last week, the L.A. Housing Department opened the walk-in portion of its NSP program. Through this program, the Housing Department will provide purchase and rehabilitation assistance to eligible homebuyers that purchase a foreclosed home in the city's NSP priority areas- meaning areas like this one where there have been high rates of foreclosure. In addition, Restore Neighborhoods L.A., a new non-profit established to carry out NSP activities in L.A., is identifying and negotiating their first property purchases for the NSP program. Restore Neighborhoods L.A. is in the process of acquiring and rehabbing the property we are standing at right now on East 90th Street.

The reason we're here today with the L.A. Housing Department is to recognize their innovative use of NSP funds, and to encourage other states and local government across the country to follow their creative, collaborative lead. The L.A. Housing Department and Restore Neighborhoods L.A. are using their NSP funds to incorporate green building practices into their rehabbing work. They are working with Enterprise Community Partners to put in place Green Communities standards and work with staff and developers to ensure that these green retrofitting standards are used on the foreclosed properties they purchase and rehabilitate. It's clear that here in Los Angeles, the Housing Department understands the relationship between housing, energy, and climate change, and is doing its part to put recovery funds to work for the good of both our environment and our communities.

Investments in green building practices and energy efficient improvements, like those the L.A. Housing Department is making, simultaneously create new clean energy jobs, reduce operating costs, create savings for low and moderate income families on their utility bills, improve real estate values, reduce greenhouse gas emissions, help us become more energy independent, and preserve existing affordable housing stock. As we work together to combat the foreclosure crisis and create and preserve affordable housing options for American families, it is critical that we begin to integrate the principles of creative design, affordability, and sustainability just like Los Angeles is doing with their NSP funds.

Here at HUD, we are creating the Office of Sustainability-which will be headed by Ron Sims-to do just that: lead the greening of housing across America by creating sustainable, walkable, and livable communities for all American families.

President Obama's Recovery Act also recognizes the importance of integrating green, sustainable building practices, creativity and collaboration into our response to the housing crisis. That's why the second round of NSP funds, which received $2 billion under the Recovery Act, will be allocated through a competition that considers capacity and innovation as key requirements for making awards. I cannot emphasize enough that innovation, creativity, collaboration, and an understanding of a need to "green" our nation's housing will be vitally important for states and local governments to demonstrate in order to receive funds through this second round of funding.

We will publish the criteria for the competition later this spring. Our goal with this second round of funding is to help communities across the country turn these foreclosed properties into homes again, but to also ensure that they go about the rehabilitation and purchase process in a smart, collaborative way that will help our environment, create green jobs, and engage local government, activists, and community members in banding together to combat the housing crisis.

California is clearly struggling with a brutal foreclosure crisis, but together with our partners on the ground- the L.A. Housing Department, Enterprise, Restore Neighborhoods L.A., and localities- we are making every effort through the NSP program and the Recovery Act to help communities here rebuild, revive, and prevent foreclosed houses from becoming sources of neighborhood blight and degradation.

I know that our second round of NSP funding will help communities across the country do the same- innovate, collaborate, and ultimately build more sustainable and green neighborhoods for all American families- and I look forward to seeing the funding proposals. Thank you so much for joining me here today and I'm now happy to take any questions that you may have.

Thank you.


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