Prepared Remarks for Secretary of Housing and Urban Development Shaun Donovan at the AARP Board of Directors February Public Policy Meeting

"Moving Toward a Green Economy: Implications and Opportunities for Older Persons"

Washington, D.C. Friday, February 26th, 2010

Thank you, Mae, for that generous introduction. I want to recognize the Board, particularly Bonnie, for your leadership.

It's a pleasure to be with you today -- at such an important moment for our seniors and for our country. And I want to thank AARP for its commitment to Livable Communities.

For more than a half century, AARP has not only been a staunch advocate for seniors -- it has been the premier advocacy organization in this country.

And HUD has a special relationship with America's senior population. A half century ago, too many of our nation's elderly, even those with moderate incomes, lived in deplorable conditions.

But with the National Housing Act that began to change, helping produce 400,000 units of permanent supportive housing for the elderly and 30,000 units for the disabled.

Today, HUD's programs serve well over 1.5 million senior households, providing supportive services and enabling our seniors to live in physical comfort and financial security.

At the same time, the Federal Housing Administration, part of HUD, plays an important role in ensuring our seniors' health. FHA provides mortgage insurance which has helped finance hundreds of hospitals and thousands of long-term care facilities across the country.

In the last three years, the hospital projects financed with FHA insurance helped pump more than $8 billion into communities around the country in construction and related economic activity.

And FHA's Home Equity Conversion Mortgage program helps seniors live independently, by allowing homeowners to extract equity for everything from medical expenses to home repairs without having to make monthly payments on the loan.

And I would add that even though the drop in home prices has forced the Administration to examine and retool a variety of lending efforts--including HECM--in our FY 2011 budget, HUD has requested a $250 million subsidy for FHA's HECM program to ensure seniors still have that ability.

But for all these successes, we also know that a storm is on the horizon.

Normally, when speaking to a group like this, I'm asked a fundamental question: "Why is this issue important to me -- to the people I represent?"

But when it comes to sustainable development and seniors, the AARP already knows the answer: because no constituency is growing faster.

As the titles of the two presentations surrounding me suggest ("The Long Term Fiscal Challenge" and "Seniors Are Our Future"), AARP is well aware of the demographic explosion that is upon us: how in twenty years, more than 70 million people will have reached retirement age.

How in the space of three decades our senior population will have doubled. And how by 2030, this country's population will grow by another 120 million people, requiring an additional 200 billion square feet of homes and office buildings.

And so at this moment, we face a choice. We can try to meet the needs of this demographic explosion ad hoc--from program to program, state to state, region to region as we have for decades--or we can begin planning for our country's future today, together, in a holistic way. And if we look at the kinds of choices seniors are already making, we see how we can and should go about it.

In recent years, we've seen seniors moving back to city centers. And I believe there are four fundamental reasons why.

First and foremost, because it's a matter of affordability. Families who use transit spend, on average, 16 percent less on transportation costs.

Secondly, because they recognize these kinds of living arrangements translate into better health -- with better access to doctors, better outdoor environments that are more walkable and better indoor environments that are more comfortable and more energy efficient.

Third, because they feel safer. The more Americans that live close to transit and accessible transportation, the safer our roads are because there are more choices for everyone.

And lastly, because of something that goes deeper than dollars and cents -- because seniors value communities and neighborhoods.

Town centers and villages are not only more walkable for seniors -- they're not as isolating as sprawling communities are either, with front doors, porches, and sidewalks. These kinds of amenities have a huge impact on seniors' ability to age in place.

These are the kinds of choices tens of thousands of seniors are already making -- because they recognize that affordable housing, supportive community features and services, and adequate mobility options are essential to aging in place.

For example, we've found at HUD that helping frail elderly live at home independently can cost less than half to 2/3 of the costs in a nursing home.

But the truth is, preserving affordable housing in transit-rich areas is becoming a major challenge, as AARP's joint study with Reconnecting America and National Housing Trust found last year. This has huge implications for lower income seniors and those in minority communities in particular.

Now, this Administration committed to full 12 month funding of Section 8 contracts through the Recovery Act, adding $2 billion, as well as the same full funding in our FY 2010 budget.

But you and I both know that as important as these steps were in the midst of a housing and economic crisis, they don't address the long-term challenge facing seniors, affordability and the ability to age in place.

As you're aware, HUD's 2011 budget calls for a suspension of the 202 and 811 capital advance program that builds new rental units for the elderly and disabled -- though I would add that we continue funding for developments in the pipeline.

So why cut these programs and why now?

To be clear, I recognize 202 and 811 produce rental homes that meet essential needs.

But it's becoming increasingly obvious--particularly in this fiscal environment--that that they fail to leverage additional resources and need to work better with other financing streams.

Seven times as many units for the elderly and disabled are produced under the Low-Income Housing Tax Credit program.

And the present path is unsustainable in any event. At this rate, inside of 5 years, there will be no capital funds available to support new projects -- even if funding were maintained at current levels, because renewals of operating costs would eat up the entire budget.

So, we are proposing to redesign these programs to better meet the current housing and supportive service needs of seniors -- so that HUD housing can truly be the platform for delivering supportive services frail elderly and disabled households need.

And we will be working with HHS to ensure better coordination between Medicaid/Medicare Waiver programs such as the Program of All-inclusive Care for the Elderly (PACE) model services and HUD housing.

But you and I both know that housing that truly meets the needs of seniors is only part of the solution -- that we need to connect our housing investments at the federal level to transportation, land use decisions and philanthropic and private investment at the local level.

That is why HUD has just launched its Office of Sustainable Housing and Communities -- led by Shelley Poticha, who many of you know from Transportation for America and Reconnecting America.

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 -- with the remainder of the funding being used to develop energy- and transportation-efficient mortgage products so the market takes into account the true affordability of a home.

We recently announced an Advance Notice and Request for Comment for the $100 million we've allocated for Planning Grants -- which you can see online at www.HUD.gov/sustainability and comment on at our new HUD Wiki.

We'll be reviewing these comments as we develop our final Notice of Funding Availability. But the goal is to make funding available to a wide variety of multi-jurisdictional and multi-sector partnerships and consortia, from MPOs, COGs and State governments, to non-profits and philanthropic organizations.

We want to encourage regions applying for funding to meaningfully engage residents and other local stakeholders, like local AARP chapters, building long-term and long-lasting alliances.

We believe senior housing can be anchors for transit-oriented development and neighborhood revitalization all across the country -- just as it is in the Fruitvale Transit Village in Oakland, to take but one example. And with this funding, we intend to prove it.

This effort is intended to complement our "Sustainability Partnership" between HUD, the Department of Transportation and the Environmental Protection Agency -- as would Senator Dodd's Livable Communities Act working its way through Congress.

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

And so, we have an ambitious agenda -- one in which no one has more at stake than our nation's seniors.

Whatever the issue--housing, health care--let there be no doubt that this Administration believes that after a lifetime of working hard and paying taxes, seniors deserve the dignity of a secure retirement.

But ensuring they have that dignity won't happen by itself. It will require all of us to work together -- as partners.

As our nation's Housing Secretary, I'm committed to being that partner to our nation's seniors and the AARP -- to ensuring we not only meet the challenges ahead, but meet them together.

And with that, I'd love to take any questions you may have.

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