Prepared Remarks for Secretary of Housing and Urban Development Shaun Donovan at the 9th Annual New Partners for Smart Growth: Building Safe, Healthy and Livable Communities Conference

Washington State Convention Center
Seattle, Washington
Thursday, February 4th, 2010

Thank you -- for that introduction and for having me here. I want to thank my good friends and counterparts, Secretary LaHood, EPA Administrator Jackson, and Assistant Administrator Stanislus, for their leadership and partnership. And let me thank the New Partners for Smart Growth -- particularly the Local Government Commission for sponsoring this conference and Harriet Tregoning for moderating this evening's session.

It's an honor to be here in Seattle tonight, and let me again say a word of congratulations to Ron Sims -- one of Seattle's favorite sons and an acknowledged expert on these issues, for his lifetime achievement award.

In the eight months he's been with us at HUD, Ron has become our "Designated Silo Buster" -- HUD's go-to guy when it comes to mobilizing people around a common agenda, whether it's working with innovative public housing directors in Memphis, helping regions like the San Joaquin Valley form Sustainable Communities Initiatives of their own or helping a community like Gary, Indiana that has suffered from chronic economic decline to work with regional partners to chart a more competitive future.

We are so proud to have him as our Deputy Secretary at HUD -- and over the course of the next few minutes, I think you'll see just how much his work here in King County has changed the way we do business as an agency.

Sustainability Is About the Future

Tonight, as we discuss leadership at the federal, state and local levels to create sustainable communities across America, I want to talk with you about what HUD is doing to tie the quality and location of housing to broader opportunities such as access to good jobs, quality schools, and safe streets.

I want to describe how we're changing the way we do business across the Administration--working with our partners at agencies like DOT and EPA--to realize that ambition.

And most important of all, I want to discuss how all this work--investing in energy-efficient homes and buildings, in renewable energy, and in next-generation infrastructure--is helping lay the foundation for the clean energy economy America needs to compete and create jobs in the 21st century.

But before I do, I wanted to discuss what "sustainability" means -- not just to us at HUD, but more importantly, to the communities with whom we partner.

If you asked the John Robert Smith, the former Mayor of Meridian, Mississippi, he'd tell you that sustainability is about choice and quality of life -- it's about overcoming state and federal barriers to create more walkable, accessible job centers, so people can live near where they work.

If you asked the John Hickenlooper, the Mayor of Denver, where they are building more than 100 miles of new light rail, commuter rail, and bus rapid transit lanes, linking the 32 communities surrounding Denver proper, he'd tell you sustainability is about building inclusive neighborhoods of opportunity -- binding communities to work together as a region so that they not only share problems, but solutions as well.

If you asked Dan Kildee, who was Genesee County Treasurer for many years, he'd tell you sustainability is about the very economic survival of a city like Flint, Michigan -- where years of population loss and economic decline have left a surplus of housing and more vacant land than can be absorbed by redevelopment. For Flint, sustainability is about being smaller but stronger and smarter.

And if you asked Stanley Tom, the Tribal Administrator of Newtok, Alaska, where the ground beneath residents' feet is literally melting because of the effects of climate change, he would tell you sustainability is about survival itself -- not only about preserving jobs and homes, but the lives of residents. And that's why they're taking historic steps to physically move the boundaries of their town to safer ground.

Whether it's revitalizing a town center, connecting affordable housing to transportation and jobs, linking cities and suburbs to one another, or taking extraordinary measures to make the places we live more resilient to climate change, every one of these communities has a different interpretation of what sustainability means to them -- driven not by what Washington says, but by local needs, local markets and local demands.

And fundamentally, each of these communities is thinking about the same thing:

The future -- how they can meet the needs of today without compromising the futures of their children and grandchildren.

That is sustainability.

The "Drive to Qualify" Myth

But while these kinds of conversations have been going on in communities and regions across the country -- for too long, Washington hasn't been listening.

Certainly, it's no coincidence that neighborhoods facing the brunt of the crisis--with the highest foreclosure rates and the deepest job losses--are often those with the least access to transportation, the most troubled schools, and the least economic opportunity.

But the effects of this economic crisis--the drop in home prices nationally, increase in job losses and our communities' struggle to rebound from that crisis--illustrate how every American is paying the price for Washington's failure to think about our nation's future as communities and regions think about their futures.

For all the implications of "sprawl"-- from job loss and economic decline, to alarming obesity, asthma rates and segregation, to the loss of habitat and global warming, to our dangerous dependence on foreign oil--all of them are driven by one fundamental problem:

The mismatch between where we live and where we work.

Whatever else we do to address these problems, America must find a way to connect housing to jobs.

Today, the average household spends more than half of its budget on housing and transportation. They have become American families' two single biggest expenses.

During the housing boom, real estate agents suggested to families that couldn't afford to live near job centers that they could find a more affordable home by living farther away. Lenders bought into the "Drive to Qualify" myth as well -- giving easy credit to homebuyers without accounting for how much it might cost families to live in these areas or the risk they could pose to the market.

And then, an odd thing happened when these families moved in -- they found themselves driving dozens of miles to work, to school, to the movies, to the grocery store, spending hours in traffic and spending nearly as much to fill their gas tank as they were to pay their mortgage -- and in some places, more.

Just ask families in Atlanta, where these costs total 61 percent of family income. Or East Palo Alto, California where they consume over 70 percent of family budgets, leaving virtually no money for groceries, for taking the kids to the doctor, for child care or school -- and no time for family.

Or 80 miles to the east in Stockton, California where nearly one in ten homes are in foreclosure, two-thirds of homeowners owe more on their properties than the houses are worth, and the average commute is 46 miles each way.

In all, in the last century, transportation costs as a share of household expenditures have increased by a thousand percent.

The impact of this mismatch goes straight to our competitiveness as a nation.

As Harriet knows, the Urban Land Institute recently found that the Washington, DC Metro area faces a shortage of 40,000 units of workforce housing. It found that even families earning over $90,000 per year--in a region with low unemployment and a resilient economy--could not find affordable housing.

Businesses can't compete in a global economy without a workforce that can afford to live near them. While countries like China and Brazil are making historic investments in sustainable, green infrastructure, our businesses and entrepreneurs are stuck dealing with traffic congestion that costs them five times as much wasted fuel and time as it did a quarter century ago.

And so let me be very clear: at a moment in which we've seen more market failures than at any point since the Great Depression, few have been as catastrophic or had as many economic and environmental consequences as "Drive to Qualify."

Sprawling Development

Of course, sprawling development didn't begin with the housing boom -- it just got worse.

Lest we forget, in the second half of the last century, the beltways and highways that drove investment away from the urban core and connected employment centers outside city limits were built by the Federal government.

And Ray, in the session following this -- you'll have plenty of opportunities to put the blame back on HUD.

But the truth is, today, we live in a changing world. Today, we increasingly recognize that cities, suburbs and the rural areas that surround them share an economic future. Metropolitan regions are the engines of our economy, generating 90 cents of every dollar and housing more than 80 percent of our population.

Today, people are voting with their feet more and more -- moving back into central cities.

Today, challenges we once associated with cities--from homelessness to foreclosures--have become surburbanized.

But even as cities and suburbs increasingly share challenges, the Federal government has done little to ensure they can share solutions.

From a one-size-fits-all approach that failed to account for variations of place, to the maze of roadblocks we put in the way of reclaiming Brownfields and promoting infill development -- the Federal government has more often been seen by communities as a barrier to smart growth than a partner in smart growth.

And can you blame them?

For decades, HUD would build housing in one part of a community and the Department of Transportation would invest in another -- with no coordination and in some cases working at cross-purposes, with highways often bypassing rural communities entirely and splitting inner-city neighborhoods in two. As a result, communities from Seattle to Salt Lake have taken matters into their own hands, leveraging public dollars with private and philanthropic capital to expand transportation options and preserve the affordability of neighborhoods.

A New Federalism Attuned to Place

From the moment President Obama was inaugurated, he directed us to not only catch up to what localities are already doing -- but to scale up those ideas, lead the charge and set the pace for change.

We've done it in three particular ways.

First, through the Recovery Act. When President Obama signed the Recovery Act into law nearly a year ago, it was designed to do three things: create jobs, help those harmed by the economic crisis, and lay a new foundation to make America competitive in the 21st century economy.

And by putting people back to work greening homes in cities like Philadelphia and building high speed rail in places like Milwaukee and Madison this Administration is using our response to the economic crisis as a catalyst to build good neighborhoods, more resilient communities and the strong, interconnected regional backbones our economy needs to create and sustain those jobs.

In fact, within 30 miles of that rail line's five stops, you find 76 percent of Wisconsin's population.

Second, President Obama just ordered the first place-based review of all federal policies in thirty years -- asking each agency to determine whether federal policies enable and encourage locally-driven, integrated, and place-conscious solutions…or obstruct them.

Third, we have been charged with forging interagency partnerships on a scale that is unprecedented. With the Long-term Disaster Recovery Working Group I co-chair with Secretary Napolitano, we are working with communities to protect against the effects of climate change by strengthening building codes, considering new approaches to land use, and incentivizing economic development in more climate-resilient places. And we expect to deliver our report to the President in April -- and then get to work implementing it.

We have also formed a partnership with the Department of Energy to streamline and better coordinate the use of $16 billion in federal weatherization funds appropriated through the Recovery Act -- and with the rule we published last week, we made 3 million public and federally-assisted rental units eligible instantly.

And of course, the Sustainability Partnership. Indeed, one of the first things we did when we took office was establish this partnership between HUD, DOT and EPA rooted in six Livability Principles to provide more sustainable housing and transportation choices for families and lay the foundation for a 21st century economy.

When it comes to housing, environmental and transportation policy, it's time the Federal government spoke with one voice.

The goal of each of these efforts is the same: to advance our shared priorities and values as Americans for the decades to come:

Priorities like jobs for the 21st century -- located closer to where we live, so businesses spend less money moving goods and services and people can spend less time commuting and more time with family.

Values like healthier, more inclusive communities -- with neighborhoods where kids can play outside and breathe clean air.

Communities where opportunities for people of all ages, incomes, races and ethnicities are never determined, as Ron puts it so eloquently, by their zip code.

These are the kinds of communities we all want our children to grow up in.

But ensuring they can isn't about telling localities what to do or how to do it. Rather, it's about offering them the resources and tools to help them realize their own visions for achieving the outcomes we all want.

It's about helping communities start sharing solutions.

It's about partnering with communities not so they make what would be considered the "right choices" inside the Washington Beltway -- but choices that work for them, for their needs, and their marketplaces.

That is an example of what I would call a "New Federalism" that President Obama is proposing -- and that's what we're committed to practicing at HUD.

Sustainable Housing and Communities

Today, I'm proud to announce that HUD is launching our Office of Sustainable Housing and Communities, which we see as the center-point of all of HUD's sustainability efforts.

And I want to say a special word of thanks to Senator Chris Dodd, whose Livable Communities Act has informed this effort from the beginning, as well as Washington Senator Patty Murray who made sure this office was funded. And I want to thank other leaders as well, particularly Congressman Earl Blumenauer for his lifelong commitment to these issues.

Because of his extraordinary effectiveness in King County, reducing barriers to sustainable development, building coalitions and creating opportunity at the metropolitan level, I've asked Ron Sims to oversee the office.

The director will be Shelley Poticha, who many of you know from Transportation for America and Reconnecting America. Her deputy will be Jim Lopez, who many of you know from King County. We believe their combined experience--planning and linking transportation and housing at the local level and developing tools to make markets work more efficiently--will help forge more sustainable, greener and smarter development in communities across the country.

Much like HUD itself, the office addresses both the quality of housing itself and its orientation to opportunity. That's why we've focused both on Sustainable Housing--to drive energy-efficient and climate-resilient housing--and Sustainable Communities, to link federal housing, transportation and environmental investments at the local level.

With a $200 million total budget this year, the office includes $100 million for metropolitan regions in the form of planning grants and $40 million for local governments in the form of challenge grants.

Today, I am announcing an Advance Notice and Request for Comment for the $100 million we've allocated for Planning Grants.

The principles girding this proposal are in lockstep with the Livability Principles we agreed to with EPA and DOT.

Funding will be available to a wide variety of multi-jurisdictional and multi-sector partnerships and consortia, from MPOs, COGs and State governments, to non-profit and philanthropic organizations.

We want to urge regions competing for this funding to build their capacity to integrate economic development, land use, transportation, and water infrastructure investments. We want them to integrate workforce development with transit-oriented development.

We want to encourage these regions to meaningfully engage residents and other local stakeholders, building long-term and long-lasting alliances.

For the first time ever, we will provide federal money to support planning grants that will selected not only by HUD, but also by DOT and EPA. And by posting this Advance Notice on our website in a wiki format over the next 30 days, we commit to ensuring all of you--residents, business, civic and community leaders from across the country--will be able to help shape the final product.

You can see it online. We want you to tell us what works, what doesn't and how it can better help your community build more sustainably. Just as importantly, we hope to send a very important signal that we in the Obama Administration are serious about being the kind of partner that listens and learns.

Changing the Way Government Works With Communities

In addition to our Planning and Challenge grants, we are in the process of taking an Energy Efficient Mortgage product to scale through our $50 million Energy Innovation Fund. And with the final $10 million of the office's budget, we are developing a tool to measure where a home is located in relation to jobs, schools and transportation.

This kind of "Affordability Index" could be applied to a whole host of HUD formulas--to Section 8, to how Fair Market rents are calculated--to ensure how we're distributing federal dollars takes into consideration the true affordability of a home.

Perhaps the most dramatic impact such a tool could have would be on the development a Transportation-Efficient Mortgage -- to lower the barriers to consumers who want to buy homes in more sustainable places by accounting for that housing's proximity to jobs and schools.

Our Energy- and Transportation-Efficient Mortgage products will be based on the same fundamental premise:

That markets work best when there is reliable and useful information for consumers and communities alike -- and that by making information on utility and transportation costs widely available, we can drive a much broader scale of change than government ever could alone, ensuring that we never again foster a culture of "Drive to Qualify."

But the truth is, $200 million alone isn't going to build more sustainable communities. That's why I believe the real size of my sustainability budget is nearly $44 billion. That's the size of HUD's overall budget -- and we intend to begin using every dollar of it to put more power in the hands of communities and more choices in the hands of consumers.

Sustainable Communities, Neighborhoods of Choice

Let me give you a few examples: sprawling suburbs are not the only communities struggling with sustainability. Throughout this crisis, in urban cores of older industrial cities--like Detroit and Cleveland--we saw 15 years of gains in neighborhood revitalization rolled back within a matter of not decades, not years -- but months.

This sharp decline after years of progress was magnified in minority communities -- where African Americans and Latinos have experienced not only a drop in homeownership rates and lost billions in wealth, but also suffered disproportionate declines in public health, educational and economic opportunities.

These developments point to a broader challenge facing localities: that you can't have a truly sustainable community if you promote segregated development patterns and concentrated poverty.

With our Choice Neighborhoods demonstration soon underway, HUD will be aiming to prove that neighborhoods can be a platform for a new kind of sustainability -- bringing to bear private capital and mixed-use, mixed income tools to transform all housing in a neighborhood.

But creating true neighborhoods of choice--where lower-income families can find opportunity and higher income families would choose to live, for their location, their uniqueness, and their amenities--requires we bring HUD's fair housing policies, which have remained largely unchanged since the Fair Housing Act was passed in 1968, into the 21st century.

With consultation from Ron Sims, HUD's Assistant Secretary of Fair Housing and Equal Opportunity, John Trasvina, is adopting a broader definition of fair housing that includes not only the racial makeup of housing, but also its orientation to opportunity -- to public transportation and job centers.

Armed with this broader set of criteria with which we can better understand segregated development patterns, HUD can not only help communities identify longstanding demographic and development challenges with new technologies such as geospatial data analysis -- more importantly, we can help them with new development strategies and targeted technical assistance. This is not just enforcement -- but what we call "Affirmatively Furthering Fair Housing."

Building on this direction, Ron and I have instructed Shelley to collaborate with Assistant Secretary of Community Planning and Development Marquez toward that end as we develop HUD's new Consolidated Plan.

With housing-specific resources like vouchers, counseling and Choice Neighborhoods, to new financing tools for transit-oriented development, to incentives that encourage the repurposing of polluted land for affordable housing development, we can help communities coordinate the use of all available resources to turn segregated neighborhoods of concentrated poverty into integrated, healthy, sustainable communities.

That is why I believe this office not only reinforces President Obama's commitment to ensuring all Americans have the opportunity to participate in real community change -- in many ways, it is the very foundation of that commitment.

For me, the ultimate goal of this office is to bring HUD's programs into line with planning processes of agencies across the Administration, so that when the Federal government invests in communities -- we are all working from the same playbook.

Realizing Our Potential

The success of the Office of Sustainable Housing and Communities won't be measured by how many grants it makes, or even its effectiveness in helping spur sustainable communities -- but whether it will even be needed in ten or twenty years.

I've told our sustainability team that they will be successful when they've worked themselves out of a job -- much as the Deputy Secretary's sustainability team did when he was in King County, by embedding this work into all our programs.

That work probably won't be finished by the end of this Administration. The sprawling of the American landscape was decades in the making -- its remaking won't happen overnight.

So, Shelley, your job is probably safe until 2017.

I've mentioned Ron Sims several times tonight. Ron and I bring different perspectives to these issues -- we're from different coasts. He worked at the county level -- I worked at the city level.

But one thing that drives us both is a belief that when you choose a home, you don't just choose a home. You also choose transportation to work and to school. You choose public safety for your children.

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

A belief that our children's futures should never be determined--or their choices limited--by their zip code.

A belief that, in America, we are only as strong as our neighbor -- that we succeed together and we stumble together, as one nation, one people.

If, in this new century, we grow our communities and our economies out of this fundamental principle, then I have no doubt our America and our children's America will be a strong, prosperous America infused with the same sense of purpose, opportunity and resolve that have always defined us.

That's the path we are on the precipice of at this moment -- may we start down it today.

Thank you.


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