Prepared Remarks for Secretary of Housing and Urban Development Shaun Donovan at the Citizens' Housing and Planning Association Dinner
Boston Convention and Exhibition Center
Thursday, October 22, 2009
Thank you, Tina - for that introduction and for your leadership here in the Commonwealth. Indeed, I want to thank Governor Patrick and his entire Administration for its leadership and partnership, as well as our honorees.
I also want to say a word of thanks to the Massachusetts congressional delegation. I've had the privilege of working closely with Chairman Olver to craft a budget that meets the needs not just of HUD but of the people who rely on our programs.
And of course, it's been a pleasure working with Chairman Frank, with whom I have been deeply involved in everything from addressing the housing crisis to creating a Consumer Financial Protection Agency that prevents a crisis like this from ever happening again. And I look forward to joining him next month in New Bedford to see for myself some of the work many of you are doing in his district.
Many of you know I'm from New York - and I will refrain from commenting on the rather extraordinary success of the Yankees this year.
Massachusetts and New York don't just have two of the great franchises in baseball - they also have two of the greatest franchises in housing. So, when I became HUD Secretary, I figured if you can't beat 'em, join 'em,
So I've brought on Sandi Henriquez as my Assistant Secretary for Public and Indian Housing and Bill Apgar, under whom I studied at Harvard as my senior adviser. Barbara Sard is my senior adviser for rental assistance and a friend and former colleague to many of you. And from Chairman Frank's office comes Peter Kovar, our Assistant Secretary of Congressional and Intergovernmental Relations.
And so, it's good to be with so many developers from all parts of the housing sector, municipal officials, local housing providers and advocates, property managers, among others.
For more than four decades-virtually all of HUD's existence-CHAPA has made the production and preservation of affordable housing a priority in Massachusetts - and made Massachusetts a model for addressing affordable housing needs.
And you've done it in so many ways.
Through advocacy and research that helps us learn what's working at the community level, what isn't and what we need to do the job better.
Through educating the public and policymakers and by building strong coalitions.
That work has always been important - but never more so than today, as communities in Massachusetts and around the country each grapple with the same fundamental problem:
How to keep our neighborhoods strong in the face of an economic storm rooted in a crisis in our housing markets.
As state and local housing experts and policymakers, you know that a home is the foundation upon which we build our lives, raise our children, and plan for their future.
You know that home is an essential source of a family's stability - the building block with which we forge neighborhoods, put down roots, and build the communities that are the engines of our nation's economic growth.
And you know that this foundation has been seriously eroded by a housing and economic crisis that has resulted in millions of Americans losing their homes - falling into foreclosure and even homelessness, devastating families and communities alike.
And you also know that long before there was a foreclosure crisis, there was an affordable rental crisis. And that crisis is still going on.
So, tonight, I'd like to take a few moments to talk about not only how we are responding to these twin crises, but how we are using this unique moment to lay the groundwork for a more resilient, sustainable future here in Massachusetts and throughout the country.
I want to talk about how we are changing the way HUD does business.
And I want to talk about what that means for all of us - particularly for those of you with whom HUD works to provide rental housing assistance.
A Unique Moment
But to understand where we're headed, we need to understand where we were - and only a few short months ago.
It wasn't that long ago that uncertainty was rampant. The U.S. economy was in a nosedive. Banks were in crisis and credit was frozen solid.
By the end of last year, a staggering $10 trillion in household wealth had been lost. In January, over 740,000 Americans lost their jobs, the worst decline in sixty years.
Serious commentators from across the political spectrum warned that we were witnessing the beginning of a second Great Depression.
But starting with President Obama's inauguration, we hit the ground running. First, the Administration put in place a Financial Stability Plan to help restore confidence in our financial markets, ensure banks have adequate capital, and encourage the flow of credit into the economy.
Second, we passed the Recovery Act and pumped nearly $800 billion into communities across the country - providing tax cuts and aid for our recovery, while laying a new foundation to make America competitive in the 21st century economy.
And third, we unveiled the President's Making Home Affordable Plan - an aggressive effort to stabilize the housing market and help millions of Americans stay in their homes.
Making Home Affordable
For states like Massachusetts, help arrived not a moment too soon.
The comprehensive approach the Administration took has allowed interest rates to hover around or below 5 percent for six months - allowing first-time homebuyers to enter the market and helping some 3 million homeowners refinance, putting as much as $10 billion of purchasing power in the hands of American households every year.
Earlier this month, the Administration announced that servicers had exceeded the goal of beginning half a million trial modifications nearly a month ahead of schedule.
Still, more needs to be done to ensure the families who need help get help.
That's why HUD is mobilizing its vast network of counselors, which includes many of you here tonight. And thanks to Chairman Olver, I'm optimistic we will help more of those families as we work to include a more than 50 percent increase in housing counseling funds in HUD's budget for next year.
That's why we've worked hard to make the process easier for borrowers and put pressure on servicers to ramp up their efforts. Indeed, this month servicers agreed not to initiate foreclosure proceedings against any borrower that has applied for a Home Affordable loan modification.
And in Massachusetts, the Warren Group reported just this week that these efforts are paying off - as foreclosures are down nearly 30 percent from last year.
With the monthly pace of trial modifications now exceeding the monthly pace of completed foreclosures around the nation-with foreclosure activity falling for the second straight month, home prices turning up, inventories of unsold homes receding and new home sales at their highest level in over a year-we believe we may finally be seeing the light at the end of the tunnel.
A Sustainable Recovery
Of course, we're not out of the woods yet. With foreclosure activity still near all-time highs, there are still too many people losing their homes.
At the same time, delinquency rates on multi-family property mortgages have risen sharply while property values continue to fall. Nationally, vacancy rates for rental properties rose to nearly 10 percent in the second quarter at the same time the number of low- to moderate-income families paying more than a third of their income for housing has increased by 20 percent in the last three years alone.
This combination of families losing their homes and their jobs has increased demand in the lower-end of the rental market, driving up costs for the families who can least afford them.
Indeed, we know that many foreclosures and vacancies are now being driven by job losses - and that's where the Recovery Act comes in.
Pumping more than $6.4 billion into Massachusetts communities-including $418 million from HUD-the Recovery Act has been critical to preserving and creating the jobs families need to stay in their homes.
In February, HUD started investing nearly $14 billion under the Recovery Act in our communities - three quarters of which, I'm proud to say, we allocated in just eight days.
But I'm even prouder that we have now obligated over $11 billion. I'm committed to not just providing more resources to our partners - but providing them faster.
As a result, more than 80 percent of HUD's total Recovery funds are now available to communities across the country and are being put to work as we speak - creating jobs where they are needed most, making homes more energy efficient and strengthening neighborhoods.
But the impact of the Recovery Act can't be measured solely in the sum of the dollars we've committed - but rather in how they're being spent. As President Obama has said, we wanted to use the Recovery Act as a new platform for smart investment and innovation.
Indeed, nearly a third of HUD's $14 billion in Recovery Act funds can be used for "greening" America's public and assisted housing stock - reducing energy costs, lowering greenhouse gas emissions and creating jobs.
And of the $4 billion that we've invested through the Recovery Act in our nation's public housing, we set aside $1 billion for the Capital Fund competitive grant program.
Perhaps most important of all to Massachusetts, the Recovery Act included $2.25 billion injection of HOME funding to stabilize affordable housing projects financed by the Low-Income Housing Tax Credit.
As you know, the current economic crisis has frozen the investments states were able to make through the Low Income Housing Tax Credit program - in Massachusetts alone, some 35 developments were stuck in the pipeline.
Thanks to the Recovery Act's Tax Credit Assistance Program-or TCAP-and the innovative Tax Credit Exchange Program which CHAPA was instrumental in securing, funds are beginning to flow again.
Here in Massachusetts-a model for implementation-75 percent of TCAP funds are on the street, working to build affordable housing and create jobs as we speak.
At the Winslow in Greenfield - where TCAP is helping develop 55 units of affordable housing.
At the Shillman House in Framingham - where TCAP is helping build 150 units for the elderly.
At Worthington House in Springfield, where 92 units will be sited at a new homeless resource center that provides medical and supportive services for those who are homeless or living in supportive housing.
Altogether, TCAP funds will complete construction on an estimated 35,000 units of affordable housing nationwide, creating or preserving tens of thousands of jobs along the way.
Preventing and Ending Homelessness
At the same time TCAP funds are helping rehabilitate Worthington House, the Homeless Prevention and Rapid Re-Housing Program created in the Recovery Act is investing $1.5 billion in communities like Quincy, who are using funds to rapidly re-house 100 families within the next 18 months.
Worcester is replacing a homeless shelter with an Assessment and Triage Center that combines rapid re-housing with comprehensive case management services.
Indeed, just as many in this room helped develop the "technology" of combining housing and supportive services that allowed us to "move the needle" on chronic homelessness nationally over the last decade - it was the local innovations spurred by the ten-year planning processes in places like the North Shore, Cape Cod and Pioneer Valley that helped us transform our approach toward preventing homelessness with HPRP.
That work proved that we can house anyone.
Our job now is to house everyone - to prevent and end homelessness. All homelessness.
Transforming Rental Assistance
But making that possible requires something that should have been done a long time ago:
And that's putting the Federal government back in the business of building and preserving affordable housing.
It's about time we did.
Homeownership is incredibly important. But if this crisis has taught us anything, it's that it is long past time we had a balanced, comprehensive national housing policy - one that supports homeownership, but also provides affordable rental opportunities, and ensures nobody falls through the cracks.
I'm sure most of you are familiar with our budget - with our commitment to full 12 month funding of Section 8 contracts, to full funding for housing vouchers, and to improving the stability and reliability of both programs.
I'm sure you know that we are fighting to capitalize the National Affordable Housing Trust Fund, which so many of you had a role in creating.
With $10 billion in the Recovery Act for rental assistance and an increase of over $3 billion more in our budget request-which Chairman Olver has proposed to raise even higher-let there be no doubt that the Federal government is back in the rental housing business.
But you know as well as I do that it's not just about more resources or providing them more quickly.
HOPE VI developments like Boston's Mission Main have shown very clearly the connection between housing, education and health - synergies we're trying to nurture with our Choice Neighborhoods proposal to link housing interventions with school reform and our Sustainable Communities initiative to link housing, transportation and land use.
For too long, the way we've built and preserved public housing and other federally-assisted housing has existed in a parallel universe to the rest of the housing world.
HOPE VI taught us about the innovations and the better outcomes that result from breaking down these kinds of barriers.
So did my experience in New York, where we implemented the largest municipal housing plan in the nation's history. We called it, after all, the "New Housing Marketplace."
The time has come to bring the way we deliver rental assistance into the 21st century - to move HUD's rental housing programs into the housing market mainstream.
The first principle for doing that is to make our rental assistance funding streams reliable. Without reliable funding, private partners won't come to the table. It's that simple.
I'm committed to this through full funding of Project-based Section 8.
And the Section 8 Voucher Reform Act-championed by Chairman Frank and CHAPA-is an important first step in that process as well by providing greater reliability for the voucher funding formula.
The second principle is to streamline and simplify our programs so that they're easier to use at the local level. Here again, SEVRA is an important first step.
But we need to go further. Indeed, with 11 deep rental assistance programs run by 3 operating divisions with nearly 6,000 employees that oversee 4,200 public housing authorities and 14,000 owners, it's clear that the complexity of HUD's programs is part of the problem.
And that doesn't include our capital programs or the Low-Income Housing Tax Credit.
For those of you who've been in the HUD building, you know what a time warp it feels like walking its halls. I get a similar feeling when our capital programs have rules that operate as if the Tax Credit was never invented. And that was nearly a quarter-century ago.
I try not to make this joke when I'm not with "housers" - but you all know the brain damage that comes with piecing together a deal that has more sources of funds with conflicting rules than apartments in the building.
Now, I've got nothing against lawyers - in fact my mother is one. But I think we can all agree that there's a better way to spend precious housing resources.
Third, to encourage resident choice and mobility, we need to find ways of combining the best features of our tenant-based and project-based programs.
This means recognizing that in a world where the old city/suburb stereotypes are breaking down, and our metropolitan areas are emerging as engines of innovation and economic growth, we have to ensure our rental assistance programs keep up.
And we also have to get past the old ideological debate about whether place-based or people-based strategies should reign. The right answer is, we need both. And I believe we can design better rental assistance programs that benefit both. We need to recognize that real choice is the option to move - but also the option to stay, in decent, strong, well-maintained housing in your current neighborhood.
Fourth, bringing market investment and discipline to all of our rental programs will also drive fundamental reforms.
Until our programs are truly open to private capital, we'll never be able to attract the mix of incomes and uses and stakeholders we need to create the sustainable, vibrant communities we all envision.
Housing is a critical resource for low-income families. President Obama knows that and that's why he's keeping his commitment to put the Federal government back in the business of building and preserving affordable housing.
But having inherited the largest deficits this country has faced since World War Two, as "housers" we have a responsibility to look at ourselves - to hold ourselves accountable and to use resources as wisely and effectively as possible. Only then can we make the way we provide and fund rental assistance as sustainable as the communities we need to build.
And to make that possible, we need your help.
The Geography of Opportunity
For President Obama, for me, for you, for all of us - it all comes down to a very simple belief:
That the futures of our children should never be determined-or their choices limited-by the zip code they grow up in.
If there isn't equal access to safe, affordable housing, there isn't equal opportunity. It's that simple.
I know change is never easy - that revitalizing our nation's communities won't happen overnight. Nor will it happen because of any one policy or the work of any one agency.
But working together, in common purpose-in partnership-we can tackle our toughest challenges.
We can push back on this crisis.
We can build upon the remarkable change and sense of possibility you're catalyzing in communities across the Commonwealth.
And most important of all, we can create a geography of opportunity for every American.
Ensuring we do is our goal today. In partnership and in common purpose, we will rise to meet it. Thank you.
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