Prepared Remarks for Secretary of Housing and Urban Development Shaun Donovan at the LISC Conference Dinner

New York, New York
Thursday, November 5th, 2009

Thank you, Jack - for that very generous introduction.

I want to thank everyone who has made this evening possible- and say a special word of thanks to the Children's Aid Society. Indeed, as we bid farewell to Pete Moses and congratulate him on a remarkable tenure as president-and thank him for the warmth and generosity he brings to everything he does-we also are excited about Rich Buerle's leadership. As it has for more than a century-and-a-half, the Society is poised to make history yet again.

It's a pleasure to be here with so many donors and executives and staff from the New York Times family.

I want to say a special word to Jack Rosenthal. While these are difficult times, this period of turmoil in the media during the worst economic crisis in 80 years has proven to be something of a perfect storm for the Times Foundation.

And so, let me thank Jack for his extraordinary stewardship of the Foundation - and for ensuring that the flagship program we celebrate tonight will carry on.

In the best of times, the Neediest Cases Fund does important work - shedding light on those in our communities on whom fortune rarely shines.

In times like these, it reminds us how fragile our own fortunes truly are.

Indeed, we meet at an extraordinary moment- in which the crisis we face-who it's affected and how we've responded-reveals so much about our country - the character of our people and the resiliency of our communities.

Having worked alongside many of the people in this room to revitalize neighborhoods across the five boroughs, I can honestly say that there are few developments more troublesome than watching so many of the gains we fought so hard for these last 15 years rolled back and undone.

Undone by foreclosures that tear apart families, force children to leave school and leave an increasing number of homeless families living out of their car or, as the Neediest Cases has shown us, worse.

Undone by so-called "financial innovation" - the true cost of which has become all too clear in recent months, with minority families particularly hard hit.

But for all the horrors that this crisis has revealed, it has also taught us so much about the nature of home in the 21st century - what it means today and the role it must play in our communities in the decades to come.

I believe a home is our center - the foundation upon which we build our lives, raise our children and plan for our futures.

It is the source of a family's stability and the building block with which we forge neighborhoods, put down roots and build the communities that are the engines of our economic growth.

But if this crisis has taught us anything, it's that when you choose a home, you don't just choose a home.

You also choose transportation to work - schools for your children.

You choose a community- and the choices available in that community.

Tonight, I want to talk about what the Obama Administration is doing to rebuild that foundation - what that means for our most vulnerable populations and the role I believe each of us here tonight must play in helping ensure our communities are more resilient, more inclusive and more sustainable in the decades to come.

Making Home Affordable

To be sure, the first order of business is pushing back on the foreclosure crisis.

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.

In October, 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 some of you here tonight, and we have asked for more than a 50 percent increase in housing counseling funds in our budget for next year.

Indeed, we are looking to New York City. With the help of people like Jack Rosenthal, who sits on the board, the Center for New York City Neighborhoods was founded to coordinate and expand services to residents at risk of losing their homes to foreclosure - including legal services, housing counseling, community outreach and consumer education.

Expecting to assist more than 20,000 New Yorkers this year through community outreach and consumer education activities, we at HUD see the Center as a model addressing the housing crisis.

And the Neediest Cases Fund has been deeply involved in this effort as well - its Neediest Subprime Fund dedicating a million dollars to not only help families that have been foreclosed on-helping them pay the rent or make a security deposit-but in some cases helping them keep their homes and avoid foreclosure altogether.

With the monthly pace of trial modifications now exceeding the monthly pace of completed foreclosures around the nation, 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.

The combination of families losing their homes and their jobs has increased demand in the lower-end of the rental market as New York knows well, 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.

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. Because this isn't just providing more resources to our partners - just as important is that we provide 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.

As important as this all is, 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.

With the Housing and Economic Recovery Act of 2008, we have already invested $4 billion in the Neighborhood Stabilization Program to help communities purchase and convert foreclosed and abandoned properties into new affordable housing, or other options, such as land banks, that preserve neighborhoods.

With the competition for an additional $2 billion of NSP funds included in the Recovery Act now underway, we can challenge communities to develop their own innovative ways to improve affordable housing, rebuild communities, and increase energy efficiency.

At the same time, the Homeless Prevention and Rapid Re-Housing Program created in the Recovery Act is investing $1.5 billion in communities is helping us shift our focus away from "managing" homelessness, toward actually preventing it. That's what the Neediest Cases Fund is doing this year, helping rapidly re-house some 120 families in dire straits.

Indeed, just as localities developed 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 communities across the country that helped us transform our approach toward preventing homelessness with HPRP.

Collectively, this work proved that we can house anyone.

Our job now is to house everyone - to prevent and end homelessness. All homelessness.

A New Direction for Housing

But realizing that ambition 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.

And with $10 billion in the Recovery Act for rental assistance, an increase of over $3 billion more in our budget request, and with our fight to capitalize the National Affordable Housing Trust Fund, 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 preventing a crisis of this magnitude from happening again is not just about more federal resources or providing them more quickly.

Don't get me wrong - with state and local tax bases decimated, the Federal government must now show the leadership we need to pull us back from the crisis at hand.

At the same time, as neighborhoods, communities and metropolitan regions alike struggle to manage forces beyond their control-from the global flows of capital and people and the traffic and pollution that result, to the loss of major industry-we must recognize that only the Federal government has the scale and mechanisms to deal effectively with these forces.

But as clear as the need for a new federal role is, just as clear is that we can't return to the old way of doing business - the one-size-fits-all approach in the development of public housing or urban renewal that New York knows all too well.

At HUD, we're committed to forging a new direction for housing.

Through our Sustainable Communities Initiative, we're committed to breaking down barriers between housing and transportation policy that has left low-income families spending upwards of 60 percent of their income on housing and transportation. The time has come to look at these challenges together.

And through our Choice Neighborhoods proposal, we're committed to strengthening the connection between successful housing and good schools, so that we're not building "islands in a sea of need" but successful, thriving communities with opportunity, choice and mobility for the families that live there.

In each, we're committed to using housing as the platform we know it can be to drive other outcomes - a place to anchor services where different policies central to opportunity can be overlaid.

I believe that's possible, but it requires us to think differently about the people and places we serve - and how we serve them.

It requires a new era of partnership with our local communities and institutions in those communities.

A New Era of Partnership

Over the last quarter century, we've seen a structural shift toward problem-solving at the local level - across party lines, inside and outside of government.

And nowhere is that clearer than here in New York City, where the most important developments in housing and community development haven't come from the Federal government or government at all in many cases - but rather a third sector of non-profit community development corporations.

With support from national and community foundations, these CDC's have become our most innovative housing developers and in many neighborhoods some of the most important civic institutions.

I mentioned the Center for New York City Neighborhoods earlier. It was there we saw foundations that helped us put in place a model for public, private and non-profit partnership to address the foreclosure crisis in a truly comprehensive way. At a time when many in government were in denial about the impending foreclosure crisis, it was foundations that had the resources-and the foresight-to act.

And with the New York City Acquisition Fund, it was foundations who helped identify the lack of access to early seed capital for nonprofit and other small housing developers, allowing $8 million in city funding and more than $34 million in foundation funding to leverage close to $200 million in private capital that will build and preserve 30,000 affordable housing units over 10 years.

Through targeted investments in this third sector, foundations have become some of our most sophisticated social policymakers - and our non-profits respected practitioners.

Our challenge now is to restore federal leadership that takes these innovations to scale- not to return to an old model of federal intervention, but to capitalize on a new model of social innovation.

Foundations have played a critical role in helping us track dynamic neighborhood change in real-time in order to understand the impact of public and private investment. In fact, it was this kind of data that encouraged then-Governor Pataki and Mayor Bloomberg to enter into NY/NY III, a billion dollar investment to create 9,000 new units of supportive housing in New York City.

To ensure we are aligning our interests around data and research at the federal level, HUD has partnered on a What Works collaborative, which has already raised $1.3 million from the Rockefeller, MacArthur, Ford, Surdna and Annie E. Casey foundations.

But at HUD, we see that as just a beginning of our partnership with philanthropy and the third sector. The truth is, foundations and non-profits can help connect place to people, institutions and ideas, break down government silos and help test new ideas that government couldn't on its own.

Few of us will ever forget the Neediest Cases Fund's work following 9/11- raising some $62 million from readers that was put in the hands of needy families within 6 months. With the help of the social services agencies here tonight-like the Brooklyn Bureau of Community Service, Catholic Charities, the Community Service Society, UJA and the Federation of Protestant Welfare Agencies-an estimated 30,000 families received $2,000 checks almost immediately.

I'm not sure the Federal government would ever be able to do something like that - or even should. But the point is clear: the third sector can bring speed government often can't.

But the partnership with philanthropy and non-profits I'm talking about isn't just a matter of government outsourcing its responsibilities, but rather catalyzing innovations that government can adopt.

I remember when New York City reached out to private and philanthropic interests with a simple proposal - if you finance these new, even controversial ideas like conditional cash transfers and prove they can work to actually reduce poverty, we'll scale up those ideas with taxpayer dollars.

But it's not just New York. In New Orleans, where families have faced incredible barriers to returning to their homes, it was philanthropic organizations who stepped up and funded non-profits they knew could make a difference on the ground.

Where government proved too slow or too inflexible to act, non-profits were able to help families facing a gap in financing - from insurance reimbursements to FEMA grants.

That work signaled to us at HUD both the need to support this model of non-profit intermediaries - but also to identify barriers to using federal funds to meet the needs of New Orleans families. As a result, the Obama Administration has taken action that will allow families to use HUD assistance to bridge that gap.

In so many ways, the third sector holds the key to solving the crisis at hand, transforming government and ushering in a new era of accountability and effectiveness - where our investments are focused not on programs and policies but squarely on the people and places that rely on them.

Investing in People and Places

Let me conclude my remarks where it all began for me - here, in New York.

A city that was once widely seen as a failure - that is today, by many measures, a success.

It was in this city, in places like the South Bronx, that I've seen for myself what we can be as a country - but just as importantly, our capacity for change.

It was through projects like the Harlem Children's Zone that I saw how that change comes not from a policy or an agency, but from the community level and through partnership - mutual partnership with mutual commitment and mutual responsibilities.

And if you need any further evidence of that, you need only look at the charity that brings us together this evening, the quarter-billion dollar difference the Neediest Cases Fund has made for New York families over this last century, but even more than that, the sense of justice it has awakened in readers across the country - and the world.

In forging a new direction for housing, we have the opportunity to realize that vision of a more just, more compassionate world - not just in the abstract, but for the very families this charity has lifted up for nearly a century.

In forging that new direction, we can envision a world in which ending homelessness, rebuilding America's great, neglected cities, or creating a geography of opportunity for every child does not describe our "hopes" as New Yorkers and as Americans - but rather our seriousness of purpose and the scale of our ambitions.

In the coming days, in partnership and in common purpose-and with a new sense of commitment-may we take those ambitions to scale.

Thank you.