Prepared Remarks for Secretary of Housing and Urban Development Shaun Donovan at the United States Conference of Mayors Winter Meeting

Washington, D.C.
Friday, January 22nd, 2010

Thank you. I want to recognize Conference President, Mayor Elizabeth Kautz, for her leadership.

I've enjoyed the opportunity to meet with many of you one-on-one these last several months - to discuss a broad range of issues, from foreclosures and homelessness to energy and climate change. And I joined many of you at your leadership meeting in Seattle in October.

It's a pleasure to be here today to address the full winter meeting - to reflect on what has been a remarkable last year and discuss some of the challenges we've faced and those we continue to face.

And I want to discuss how President Obama's leadership-the experiences that have shaped his values and priorities-has impacted HUD, our nation's cities and the way we work together to tackle our toughest challenges.

Stabilizing the Housing Market

To be sure, no challenge has posed a more serious threat to our communities than our housing crisis.

That's why, together, this Administration has worked to tackle the housing crisis on every front - and make every effort to help American families keep their homes. A year ago our financial sector was on the brink of collapse and house prices were falling rapidly. Many were predicting a second Great Depression.

A year later, with home prices up for two quarters in a row, interest rates near five percent and home sales rebounding - the nation's housing market is returning to stability. While the recovery is still fragile, we have come a long way from where we were when the President took office.

First, the coordinated efforts of the Treasury and the Federal Reserve have combined to maintain mortgage interest rates near record lows for nine months. But let's be clear: low interest rates alone don't benefit American families if no one is lending money. That's where the Federal Housing Administration, Ginnie Mae and the GSE's have come in - ensuring essential liquidity and credit available in our housing market.

And by playing an essential, though temporary, role until the private market returns, the FHA is insuring almost 30 percent of purchases and 20 percent of refinances in cities and communities across America.

The first-time homebuyer tax credit the President signed into law as part of the Recovery Act was so successful, it has been extended into this year.

Together the record low interest rates, liquidity and the tax credit have enabled first-time homebuyers to enter the market, have helped over 3.8 million homeowners refinance, and are pumping $13 billion annually into our local economies and businesses every year - generating additional revenues for our nation's cities.

We've also provided billions in temporary financing and credit to state and local housing finance agencies to help them make affordable financing available to hundreds of thousands of new homebuyers and existing homeowners, as well as support the development and rehabilitation of affordable rental properties. Over 90 state and local HFAs representing 49 states participated in this program, at no expected cost to the taxpayer.

But we all know that many American families continue to face the threat of foreclosure - and many have lost their homes already. That's why we launched the Administration's unprecedented and multifaceted modification program to keep families in their homes whenever possible.

As of this week, we have extended offers for trial modifications to more than 1.2 million American homeowners - and over 900,000 have entered the trial modification period.

But obviously, we know there is more work to be done to help all those eligible for the program to qualify and to ensure that trial modifications become permanent. But we are making progress there too: from November to December of 2009, we tripled the number of modifications made permanent through our modification efforts.

Meanwhile, two Recovery Act programs-the Housing Tax Credit Exchange Program and Tax Credit Assistance Program-are working together to jumpstart affordable housing developments stalled by the collapse of the Low-Income Housing Tax Credit market. And as we build and preserve multifamily rental housing, we are working to ensure families can afford that housing by providing full funding of Section 8 contracts through the Recovery Act.

And we are confronting the housing crisis on the ground through the Neighborhood Stabilization Program. Through NSP, communities across the country have been using $4 billion in HUD-administered funds to reclaim foreclosed homes and place them back into productive use, stabilizing neighborhoods and property values alike.

Just last week , HUD awarded an additional $2 billion in competitive neighborhood stabilization funds provided through the Recovery Act, rewarding the best ideas for tackling the foreclosure crisis while building on the first round of NSP grants that have flowed to communities across the country. 77 percent-over $1.4 million-of these funds went directly to local governments or consortia including at least one local government.

The Recovery Act: A New Way of Doing Business

Indeed, as so many of these efforts-and Neighborhood Stabilization in particular-show, at the same time the Recovery Act is helping address the housing crisis, it's also helping our nation's communities recover more broadly from its effects.

Indeed, with NSP2 grants announced, HUD has now awarded 98 percent of our $14 billion in Recovery funds-$13.3 billion- and we've created over 13,000 jobs to date. So now we're shifting our efforts from awarding and obligating funds - to ensuring that we are spending money on the ground in communities across the country.

That's why in recent weeks, I have been on the phone with many of you - to discuss your progress on Recovery Act implementation.

In some cases, I've called to congratulate you for a job well done on spending these funds quickly and effectively - in others, I'm asking you to do more and make sure your Recovery funds are being put to work as soon as possible.

These efforts speak to a larger point about the Recovery Act - how it has not only challenged us to transform our economy, but also the way we in government do business.

By collecting detailed reports from over 130,000 recipients nationwide, the Recovery Act is unquestionably the largest, most detailed and transparent effort to track the progress of a government program in American history.

But long after the last Recovery Act dollar is spent, its legacy won't only be the bridges it built and jobs it creates. Just as important will be the new platform it's creating for the transparent and public accounting of taxpayer dollars - to show us what's working, what's not, and what we need to do better.

And similarly important will be HUD's unprecedented support and nurturing of local innovations - from the greening of public housing to local responses to homelessness.

In June, the Conference of Mayors asked HUD to commit to greening affordable housing developments - and with the Recovery Act, we have.

We recently announced $600 million in funding for a Capital Fund competitive grant program, to encourage public housing authorities to increase energy efficiency in their properties - saving money, protecting the environment and creating jobs in communities from Bridgeport to Oklahoma City to Los Angeles.

This month, we awarded the first grant for our Assisted Housing Green Retrofit program - a $250 million program to make energy efficiency and green retrofit investments in our multifamily affordable housing stock.

All told, nearly a third of HUD's Recovery Act funds can be used for "greening" America's public and assisted housing stock.

Responding to homelessness is another great example. With the Homeless Prevention and Rapid Re-Housing Program in the Recovery Act, we have begun reorienting the Federal government toward preventing homelessness as cities across the country have been doing for years.

In your own recent report, you found that 18 cities-or 72 per cent of respondents-reported that the Homeless Prevention and Rapid Re-Housing Program will ‘fundamentally change the way [their] community provides services to people who are homeless or at risk of homelessness'.

Indeed, no one understands better than our mayors on the front lines in the battle to prevent homelessness just how much the platform of a stable home can drive other outcomes - like savings in the area of health. And it's time the Federal government recognized that as well.

That's why we're undertaking a comprehensive review of HUD's "mainstream" programs-public housing, Section 8, HOME, CDBG-to ensure they are working in an integrated way toward preventing homelessness.

It's why we're fully committed to helping you implement your 10-year plans to end homelessness.

And as chair of the Interagency Council on Homelessness, I'm proud to say that in May, we will be delivering to President Obama the nation's first ever comprehensive federal strategy to end homelessness - building on the kinds of partnerships that ICH has established with mayors across the country.

Seeing Cities As a Solution

So, under the leadership of a President who understands the challenges our cities face and has done the hard work of helping solve them as a community organizer, let there be no doubt that this Administration is committed to helping our cities recover.

Like President Obama emphasized yesterday, we're part of perhaps the first Administration that sees cities not as the source of our problems - but a big part of the solution. And with metropolitan areas-the cities, suburbs and rural areas that surround them-generating 90 cents of every dollar in our economy and housing more than two-thirds of our population, it's clear they must be.

Indeed, when you see cities differently - you begin to work with them differently - which we've started to do through HUD's Sustainability Partnership with the EPA and the Department of Transportation to connect housing to jobs by linking housing with transportation and land use. I know that you heard earlier from my colleague, Secretary LaHood on this subject.

We are also seeing the success of these inter-agency partnerships with the Long-Term Disaster Recovery Working Group. HUD is working with the Department of Homeland Security to determine what cities really need to not only make the "right" choices when it comes to building codes, land use, economic development and regional threats - but choices that work for your communities, your needs, and your residents.

The same is true of our partnerships with the Departments of Energy and Labor to connect housing to weatherization and workforce development.

And this is particularly true in the area of fair housing. As you know, our recent Westchester settlement will ensure the development of 750 units of affordable, accessible housing in neighborhoods with very low African American and Latino populations in Westchester County, New York.

It's no secret that development patterns created by government at all levels have excluded some from the promise of good neighborhoods and that many of the neighborhoods hit hardest by the foreclosure crisis are among the most segregated.

That's why we see this landmark resolution as a model for inclusive and sustainable housing not only in Westchester, but in communities across the country. And that's why we are reforming the affirmatively furthering fair housing obligations.

These obligations will help make real the vision of diverse and integrated neighborhoods that provide more educational, economic, and employment opportunities to their residents. And they will help ensure that our children's futures-and their choices-will never be determined by the zip code they grow up in.

It is time for us all to move forward with proactive, measurable steps that ensure fair housing. In that process, HUD is committed to providing clear guidance and more support to our cities and suburbs than ever before to ensure you can meet these important obligations.

In all of these efforts-promoting fair housing, preventing homelessness and disaster, stabilizing neighborhoods-our approach at the federal level is the same:

To focus on the outcomes we all want for our communities wherever we live-whether it is a more competitive economy, less time commuting to work and more time with family, more inclusive neighborhoods-by providing those communities with the tools necessary to realize those outcomes for themselves - in a way that suits their needs, their strengths.

A Budget That Invests in Cities

But this Administration doesn't just tell you that we see cities as the solution and then leave you to do it yourself. We're committed to investing in cities to ensure their success. I'm proud to stand before you today to make clear that with the recent passage of HUD's FY 2010 budget, we're ushering in a new era of partnership with our cities - and putting in place a historic budget that ends over a decade of slow starvation of HUD's housing and community development programs. This budget will allow us to build on all that we've achieved in the past year.

First and foremost, we've delivered on President Obama's campaign promise to fully fund CDBG - an especially critical tool for all of you as you face the impact of economic hardship on your citizens, their neighborhoods, and your fiscal capacity to address them.

Going forward, I'm committed to preserving this lynchpin of your local community and economic development efforts.

Our budget also gets the Federal government squarely back in the business of affordable rental housing at a time when our cities need it most, renewing all project-based rental assistance contracts, and in doing so, preserving more than 1.3 million affordable rental units.

And with a 13 percent increase in funding for the Housing Choice Voucher Program, we'll be able to assist more families with vouchers than ever before as our housing market continues to return to stability.

But we know that the best ideas for building our future come from your towns and cities. That's why our budget launches two significant initiatives that will soon be funding some of the most innovative ideas across the country.

Firstly, our new Office of Sustainable Housing and Communities. We will soon announce a Notice for Funding Availability for the office's $140 million in Planning and Challenge grants. You may have heard sustainability pioneer and HUD Deputy Secretary Ron Sims describe the role of the new office when he spoke to you on Wednesday.

Secondly, our innovative Choice Neighborhoods Initiative which is accompanied by an increase in HOPE VI funding to $200 million - a 67 percent increase.Through Choice Neighborhoods, a third of these funds can be used to support demonstration projects extending neighborhood transformation efforts beyond public housing - linking housing interventions more closely with school reform and the Department of Education's Promise Neighborhoods effort that Secretary Duncan spoke about earlier in this conference.

But the bottom line is that we can't help transform our communities if we don't transform HUD. That's why the $239 million Congress provided for us to get working on our Transformation Initiative is so important.

These funds aren't just about HUD - but also how HUD works with our cities and helps build local capacity.

Through the Transformation Initiative, we'll begin that process - providing $45 million in technical assistance, but just as importantly the information our grantees need to better target their resources and build their own capacity for community planning and development.

The time has come to not just look at community planning and development needs, public housing or multifamily needs in a vacuum - but take a more holistic, cross-cutting view of community needs broadly so that it makes the most impactful difference on the ground in our communities. And with our Transformation Initiative, we'll have the tools to start doing that.

A New Era of Partnership

So, this is a historic budget - not only for HUD, but for the cities and grantees that rely on us. Going forward, we know that FY 11 will be a tough fiscal year and we're going to have to make some difficult choices.

But even in this challenging economic climate, I want to assure you today that we will maintain a strong commitment to our largest core rental assistance and economic development programs-CDBG and both Tenant and Project-Based Section 8-programs that we know are critical to you and your residents.

But no matter how difficult the fiscal environment gets, if we've learned anything in this past year it's that change comes from the community level and often through partnership.

And if we've learned anything from our partnership, 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, public safety.

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

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, any one agency and any one sector.

And having been a city official, I more than understand the frustrations of dealing with HUD in the past.

But with the right tools, I've seen for myself what how resilient and innovative our cities can be - how they can turn crisis into opportunity.

This past year, I've seen how a community like Kansas City could blend dozens of sources of Recovery Act funding in a 150-block neighborhood to make federal investment more catalytic and impactful.

I've seen how Columbus, Ohio and Detroit, Michigan-whose challenges long predated the current economic crisis-could capitalize on community anchors like universities and hospitals to stabilize neighborhoods wracked by foreclosures and pave the way toward a 21st century economy.

I've seen how the little Mountain View neighborhood in Anchorage, Alaska leveraged a $14 million investment made by HUD into a $100 million commitment by public and private partners - transforming the community from one of need to one of hope and stability.

I could spend the next hour talking to you about what I've learned in my travels across the country this last year, where I've seen how different cities face vastly different challenges and require very different tools.

To echo President Obama's comments yesterday, one thing that every city needs is a partner-both in the White House and the Administration-who can provide resources, but also the guidance necessary to use those resources in the best possible way, specific to the challenges they face.

That's what a partner is - and it's why I'm thrilled to be one to all of you here at HUD.

Thank you.

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