Prepared Remarks for Secretary of Housing and Urban Development Shaun Donovan at the Urban Land Institute Annual Spring Council Forum

Atlanta, GA
Thursday, April 23rd, 2009

Thank you so much. It's great to be here and it's an honor to address the Urban Land Institute during your annual spring forum. I also want to thank Mayor Shirley Franklin for hosting us here in the great city of Atlanta.

Thanks especially to Ron Terwilliger for the introduction. I've known Ron for many years and had the opportunity to work with him in many capacities in his work with Enterprise, Habitat for Humanity, and Trammell Crow Residential. I am thrilled to join him here today.

As I was preparing to come to Atlanta to be with you here today, I was struck by how closely HUD's mission and ULI's mission align around the issues of sustainability and metropolitan planning. Your own mission as an organization is to "provide leadership in the responsible use of land and in creating and sustaining thriving communities worldwide," and really, I see HUD's mission as being quite similar. And like HUD Secretaries who have served before me, including Jack Kemp and Henry Cisneros who aren't here today but both serve on the board of the Terwilliger Center for Workforce Housing, I see HUD as an agency that must form strategic partnerships with the private sector in order to achieve our mission of building sustainable communities. I'm also a strong believer that a crisis is a terrible thing to waste, and in the face of this crisis, we must take the opportunity to forge a new way of doing business at HUD and collaborate in innovative, new, and unprecedented ways.

Today I'd like to share with you my vision for HUD and the role I believe HUD can play in creating both sustainable communities and quality of place across the country. HUD can and will be a vehicle to advance sustainable growth patterns in our metropolitan areas, communities of choice in our neighborhoods, and energy efficiency in our buildings. Together with the partnership of ULI's members, I know we can make our vision of sustainability a reality for our families, communities, and this nation.

In recent years, HUD has been the Department of Subsidized Housing and that must change. We've got to put the "UD" back into HUD. Now let me take a moment to read you something that I believe is really a model for where HUD needs to go as an agency.

This is part of a mission statement so let me just give you a snippet- "assist communities in developing solutions to community and metropolitan development problems and encourage effective regional cooperation in the planning and conduct of community and metropolitan development."

You might be surprised to learn that this language is not a phrase from the founding charter of the Urban Land Institute and it is not from the latest Brookings Institution report. It is in fact the language from HUD's original charter in 1965. Clearly, a larger vision of HUD is not a new idea- the "UD" has always been part of HUD.

This part of the agency's mission recognizes at the outset that the design, location, and management of housing have a dramatic effect on the quality of place. The evidence proves that the concentration of low-rent housing in small geographic areas, mostly inner city neighborhoods, has damaged the economic health and vitality of people and places. The "UD" in HUD reflects an understanding that many places in the U.S. are cut off from the economic mainstream and need access to new initiatives and funding sources to jumpstart private market activity.

This larger vision of HUD is especially relevant today. As we look at the patterns of foreclosure across the country, it's not a coincidence that the neighborhoods with the highest foreclosure rates are those in the least sustainable place. Both in relatively new, suburban areas that are disconnected from transit option and in older urban centers where residents are disconnected from educational and employment opportunities, it is clear that there is a larger lesson to be learned from the current mortgage crisis about sustainable communities. There is also a larger lesson to be learned about how HUD must change given the large scale demographic and market shifts that have occurred in our country since HUD's founding.

Now, more than ever before in history, we live in a global economy where capital is mobile and quality of place drives the free flow of capital. People are increasingly moving to diverse and interesting places and capital is following. In turn, quality of place, quality of life, and strong neighborhoods are becoming economic drivers for states and localities.

Cities have found new functions and roles in this global economy, partly because an economy fueled by innovation bestows new importance on institutions of learning and research, like our universities and knowledge-economy industries. The top 100 metropolitan areas alone now house 2/3 of the American population and generate 3/4 of our GDP.

Cities are regaining their status but in the context of sixty years of suburban, and now exurban, growth. The lines between urban, suburban, and rural areas are blurred. More residents of small towns now find themselves part of the large labor markets that metropolitan areas represent. In 2000, over 50% of all people living in what the census defines as rural areas actually lived within the boundaries of metropolitan areas.

Concentrated poverty in inner cities remains a serious challenge. The 2000 census showed that some 7.9 million poor people live in census tracts where the poverty rate exceeded 40%. Those neighborhoods of extreme poverty are overwhelmingly located in central cities. But as the lines between urban, suburban and rural have blurred, so have many challenges traditionally seen as "urban problems" become suburban and rural ones too- poverty, access to services and housing affordability are just a few. HUD can play a key role in helping metropolitan areas address those challenges holistically and end the historical playing off of city versus suburb, a sad legacy which too often has had a racial dynamic.

The fact is that the economic geography and spatial landscape of America has altered considerably, and HUD must alter too. HUD must foster coordination and connection within the agency, across agencies, and with all of our stakeholders, including the private sector. You will see this unprecedented collaboration and innovation occur in everything at we do at HUD, both in the short term on the Recovery Act and into the future.

The landscape that I've laid out for you in the last few minutes also demands that we get away from our mentality of purely enforcing existing fair housing laws to affirmatively encouraging integrated development that will create a geography of opportunity for all Americans.

When a family chooses a place to live, they are choosing a foundation from which to build their lives. They are not just choosing a home, they are choosing a school for their kids, they are choosing transportation options and public services. HUD can and must be a leader in forging innovative partnerships, building housing in context, creating a geography of opportunity for ALL Americans, and most importantly in creating and preserving quality of place.

Luckily, we at HUD have plenty of local examples across the country to lead us in changing the way we operate, changing our programs, and changing the way we work with our stakeholders. Many exciting ideas around planning are coming from the localities- Los Angeles, Seattle, Denver, Chicago, Miami, my own New York City, and here in Atlanta where public and private partnerships around public housing have flourished. HUD must support local work and innovation around planning and stop being a roadblock to creative local ideas.

When I was in New York, the inclusionary zoning we implemented in the city allowed us to build new communities from former industrial and manufacturing areas in a diverse way that will serve a range of incomes and preserve the rich tapestry that Jane Jacobs praised and makes New York so special. In Greenpoint and Williamsburg, a decaying waterfront is being transformed into mixed income housing with a waterfront park and ferry access direct to Wall Street. In West Chelsea, affordable housing is being built within the same buildings as market rate apartments and all as part of a thriving arts district centered around the spectacular High Line park.

And the rezonings in New York are part of Mayor Bloomberg's PlaNYC – an ambitious effort to grow New York by 1 million people while at the same time cut carbon emissions 30% by 2030. That's the kind of forward-thinking creativity HUD should be supporting.

But in New York, we didn't look to HUD for inspiration. That should change. HUD can and must partner with state and local governments, non-profit organizations, and the private sector to support local innovation and the preservation of quality of place. Even in the midst of a moment of great peril in the private sector where building projects have been put on hold across the country, local areas have been setting in place the structures and the foundations for future growth, and we at HUD must support those efforts. Ultimately, HUD and the federal government have to get out of the way and be a resource to localities that want to think in a more integrated way about their planning.

And we've already started. HUD's new way of doing business can be seen most visibly seen in our work on the Recovery Act and on our 2010 budget proposal to Congress. Both the Recovery Act and our budget mark our first steps toward the broader transformation and renewal at HUD. With the $13.6 billion HUD received through the Recovery Act, we are leading by example and investing in energy-efficient improvements and spurring innovation and creativity both among our grantees and by example within the private market.

As part of a broader effort to weatherize homes and create green, clean energy jobs, nearly $4 billion in Capital Funds is going to public housing agencies. These funds will enable them to undertake energy-efficient modernization projects and make large-scale improvements to public housing developments. These projects will both create jobs and save money in energy costs. A further $250 million will be directed to energy-efficient and green retrofits for assisted multifamily housing.

As an example of just the types of innovative collaborations we are undertaking at HUD, we have formed an exciting partnership with the Department of Energy that will streamline and better coordinate all federal weatherization efforts to make it much easier for families to weatherize their homes. Our goal through this collaboration across agencies is to spur a new home energy efficiency industry that could create tens of thousands of jobs. Working together, our two departments will ensure that Recovery Act funds help to build a home energy efficiency industry in the U.S.

In our budget too, we are changing the way that we do business and focusing our work on supporting localities foster quality of place and geography of opportunity. The goal of our budget, plain and simple, is to rebuild HUD as a powerful agent for advancing not only national housing objectives but economic, social, environmental and energy goals as well- sustainability included. Our budget will drive energy efficient housing and inclusive, sustainable growth. It contains funding for an Energy Innovation Fund to catalyze private sector investment in the energy efficiency of the nation's housing stock. Our budget also includes the establishment of a Sustainable Communities Initiative.

The Initiative will catalyze a new generation of metropolitan and rural efforts to integrate transportation, housing and land use planning and decisions in a way that maximize choices for residents and businesses and builds a new geography of opportunity. And in order to ensure that collaboration both at HUD and with other agencies occurs on sustainable communities, we've created the Office of Sustainable Housing and Communities. This new office will coordinate our efforts in creating sustainable, walkable, and livable communities for all American families.

Transportation is another issue on which we will be collaborating with our partners in government. The average American working family spends nearly 60% of its budget on housing and transportation costs. That figure is staggering, and this way of life is simply not sustainable. Together with the Department of Transportation, we will lower these costs and expand every family's choices for affordable housing and transportation by better coordinating our investments on the federal level. The interagency task force we've formed between HUD and DOT will set forth a new vision of integrated regional housing, transportation, and land use planning.

Specifically, HUD and the Department of Transportation will jointly administer a fund to encourage metropolitan regions, via competition, to develop integrated housing, land use, and transportation plans- and to use those integrated plans to drive the planning and decision-making of localities, which will help reduce traffic congestion and increase transportation mobility. The goal of this initiative is not just to develop plans – it is to set a vision for growth that is tailored to discrete metropolitan markets, and then apply federal housing, transportation, and other investments in an integrated manner that supports that broader vision. This partnership works to tackle the interlinked challenges of affordable housing and transportation that ULI's very own report entitled Beltway Burdens recently highlighted.

In our budget, we also recognize the need to continue the effort, started under HOPE VI, to alleviate the concentration of poverty in inner city neighborhoods fostered by decades of poor planning. This effort will help us directly achieve our goal of creating a geography of opportunity for all Americans. We are requesting a substantial investment in a new Choice Neighborhoods Initiative. The initiative would challenge public, private, and nonprofit partners to extend neighborhood transformation efforts beyond public housing and link housing interventions more closely with school reform and early childhood innovation. Choice Neighborhoods would differ from HOPE VI in several respects. The pool of eligible applicants would be broader than public housing agencies and include local governments, non-profits, and private firms. Choice resources could also be used to support the transformation of assisted housing developments, the acquisition and renovation of unsubsidized, privately owned stock, and the construction of mixed income housing in strategic locations.

In recent years, "ambition" or "innovation" are not words many people would associate with HUD. Our agenda for the coming months and years at HUD is clearly an ambitious one, and you might be asking yourselves if we at HUD are really up to the challenge of making these transformations a reality. Well, the answer is yes, we are up to the challenge, but we will need your support and partnership in achieving our goals.

I strongly believe that HUD can be a vehicle for advancing sustainable growth patterns, but I think that our ambitions can only be achieved in partnership with the private sector. Mayor Shirley Franklin here in Atlanta has been at the forefront of forging these kinds of partnerships on housing, along with the CEO of the Atlanta Housing Authority CEO Renee Glover. Atlanta has formed strategic public/ private partnerships that have driven the city's advancements in urban revitalization and they should serve as a model for all of us as we work to promote such partnerships across the country.

In order to achieve these public private partnerships and create an ability at HUD to partner with the private sector, HUD will bring in strong leadership that understands just how these partnerships are formed and maintained.

I'm delighted that President Obama has nominated Ron Sims to be HUD's Deputy Secretary. Ron is the county executive of the 13th largest county in the U.S., King County, which includes Seattle. He has been one of the great leaders nationally in his effort to link housing, zoning, and transportation and he will continue that work at HUD in the new Office of Sustainability. He brings with him to HUD an understanding of how to work with the development community to create a sustainable roadmap for a metropolitan area.

Carol Galante is another leader who will be joining us at HUD, and many of you know her as a former member of the Board of Trustees for ULI. I'm incredibly honored that President Obama has appointed her as Deputy Assistant Secretary for Multifamily Housing Programs at HUD. Our multifamily programs must begin to engage the private sector in new ways because our programs today don't effectively work with tax credits and private finance in ways that support mixed use and mixed income development. That will change under the leadership of Carol Galante, and I'm thrilled to have her on board.

As many of you know, FHA's role has grown substantially from 3% of lending activity by dollar volume in 2006 to approximately 30% of all mortgages originated today. With this percentage of the market and with new higher loan limits, we have an opportunity in FHA to be an important partner with you in driving energy efficiency and in achieving savings that will make it possible for the average American family to weatherize their homes. David Stevens, who has been nominated as Assistant Secretary for Housing and Federal Housing Administration Commissioner, will lead the charge in reforming FHA. Just like Mayor Franklin and Renee Glover have used strategic partnerships to transform public housing into flourishing neighborhoods, we must do the same to transform FHA.

On September 9th, 1965, President Johnson signed the law establishing HUD and I think his words are particularly important for us today as we work to reform HUD in the face of an economic and housing crisis that is crippling our families, our neighborhoods, and our country. He said the following about the multitude of problems that were plaguing urban areas and the larger crisis facing the entire country: "Unless we seize the opportunities available now, the fears some have of a nightmare society could materialize." He argues that HUD's creation was "the first step toward organizing our system for a more rational response to the pressing challenges of urban life."

HUD is more important now than any time since its founding, and we have no option but to rise to meet our challenges head on and seize the opportunities available to us now just like President Johnson talked about. For far too long, HUD has been a federal agency that focused on policies and programs, not people and places. But under my leadership and with your partnership, HUD will seize this opportunity and become a federal partner that works with you and not against you to foster creativity and innovation, and encourages states and localities to do the same. In this moment of national crisis, we will be an agency that truly focuses on people and places, and we will do everything possible to ensure that our programs are improving lives and communities and creating a geography of opportunity for all Americans.

Just like HUD was founded to do, we will put the "UD" back in HUD as we work to fix the housing crisis and more broadly create and support sustainable, livable communities across the country. We have before us an incredible moment of opportunity to make the words of HUD's founding as an agency sing again in the next couple of years, and we must not let this opportunity pass us by.

I look forward to making this broader vision for HUD and our communities a reality once more, and I know that by working together in new and collaborative ways, we can achieve it.

Thank you.