Remarks of Secretary Shaun Donovan National Housing Law Project National Conference For Housing Justice Network Washington Court Hotel

Washington, D.C.
Monday, March 8, 2010

Thank you, Barbara -- for that very generous introduction, but more importantly, for your dedication to HUD's mission.

Barbara never fails to remind us at HUD that housing is fundamentally about people and justice.

For four decades, the Law Project has reminded us of that as well -- and I want to thank all of you, particularly Bob Pearman, Marcia Rosen and Jim Grow. Whether it is fighting to increase the supply of decent affordable housing, preserving existing housing, standing up for the rights of low-income tenants and homeowners, or increasing opportunities for minorities -- the Law Project has always spoken for those and with those who need it most.

As some of you know, when I was last at HUD, I served as the Deputy Assistant Secretary for Multifamily Housing.

It was Jim and Michael Kane who said the Federal government should fund tenant organizing. They argued--very persuasively, I might add--that it would be money well spent because tenants could be HUD's "eyes and ears" on upcoming opt-outs or defaults.

They were right -- that advice helped us save dozens of buildings for residents in New York City.

That experience reaffirmed for me that housing policy is not about rules and regulations. It's not about bricks and mortar.

It's about people.

I wanted to be HUD Secretary for the same reason all of us are here today -- to make a difference in the lives of those our society has too often forgotten.

And I've brought together a team with a strong record of doing just that. I know many of you have heard from the members of HUD's so-called "Dream Team" earlier today -- Barbara and our Assistant Secretary for Fair Housing and Equal Opportunity, John Trasvina. I know many of you have also met with our Assistant Secretary for Public and Indian Housing Sandi Henriquez, and Carol Galante our Deputy Assistant Secretary for Multifamily Housing.

And many of you already know Erika Poethig who I understand nominated the Law Project for the MacArthur Award for Creative and Effective Institutions it won in 2007.

This has certainly been a remarkable year for all of us -- as we have dealt with a housing crisis that has touched every community, every family, in one way or another.

Together, we've implemented the Recovery Act to help the most vulnerable. Along with the budget we passed for FY 2010, we stabilized core housing programs--from Section 8 to public housing--and took the first steps toward restoring balance to our national housing policy -- supporting homeownership, but also providing the affordable rental housing families need.

And just recently, we offered a budget that builds on these successes, even in a very difficult fiscal environment with tough choices -- including a nearly $200 million increase in homeless assistance funding, a record number of people served by the Section 8 voucher program and a billion dollars to capitalize the National Housing Trust Fund.

Our work is far from over. Too many people are still at risk. And we still need to take fundamental steps to ensure a crisis of this magnitude never happens again -- from reforming our financial regulatory system with a strong independent authority that protects consumers to passing health insurance reform that puts families in control of their health care and covers an additional 30 million families.

An Unsustainable System

But this afternoon, I want to focus on what I believe is the single most important thing we do at HUD -- and that is provide rental assistance to America's most vulnerable families.

Indeed, this crisis has underscored, in many ways, the broad impact HUD has on people's lives, with our public housing programs alone serving some 2.3 million residents in 3,500 communities, two-thirds of whom are elderly or disabled. In all, HUD provides deep rental assistance to more than four-and-a-half million households -- helping families and also giving communities the tools they need to tackle their development needs and challenges.

Unfortunately, for all our progress and efforts, our continued ability to serve families in need is at risk.

Today, billions of dollars of federal investment in public and assisted housing is in danger of being lost for future generations.

I'm proud that the Obama Administration was able to provide an additional $4 billion in public housing capital funding as part of the Recovery Act last year.

But that funding meets only about a fifth of the estimated $20 billion capital backlog in public housing properties. At the same time, we've lost 150,000 units from our inventory of assisted stock through demolition or sale in recent years.

Given the size of the federal deficit we've inherited, it's clear the Federal government alone will not be able to provide the funds needed to bring properties up to date and preserve them for the next generation.

Of course, as great as capital needs are, you and I both know that the depth of human needs is even greater.

Decades after William Julius Wilson awakened America to the shattered lives of those living in public and assisted housing in our poorest neighborhoods with The Truly Disadvantaged, countless residents still remain trapped in neighborhoods of concentrated poverty -- because moving means giving up their subsidy. These families not only lack mobility -- they lack hope. They lack opportunity.

They lack choice.

Today, at this moment, we face a choice of our own -- we can approach the challenges facing this population ad hoc, piecemeal, from program to program, as we have for decades.

Or we can deal with them now--together, in partnership, in a comprehensive way--and put our rental assistance programs on a more sustainable footing for years to come.

With this perfect storm of challenges and opportunities before us, I believe now is the moment to permanently reverse the long-term decline in the Nation's public housing portfolio and address the physical needs of an aging assisted housing stock -- and finally move HUD's rental housing programs--and the people who rely upon them--into the housing market mainstream.

Transforming Rental Assistance

That is why HUD is proposing in our FY 2011 budget to launch a multi-year effort called the Transforming Rental Assistance initiative -- or "TRA."

As you know, we didn't approach this subject lightly. Through an extensive strategic planning process that engaged over 1,500 internal and external stakeholders, we have heard how our rental programs need to change -- and I know some of you joined us at the series of rental assistance convenings we have held. And I want to thank you for the feedback you gave us at those sessions.

The initiative is anchored by four principles.

First, that the complexity of HUD's programs and their overlapping delivery systems is part of the problem.

Right now, HUD has thirteen different deep rental assistance programs, each with its own rules, administered by three operating divisions that contract with more than 20,000 separate entities to deliver rental assistance to 4.6 million households.

No one would ever intentionally set up a system this complicated.

We've seen how smaller legacy programs like Section 8 Moderate Rehabilitation contracts administered by PHAs and properties assisted under the Rent Supplement or Rental Assistance Programs have become "orphans" at HUD as new housing programs have evolved.

And we've seen how this proliferation of programs and delivery systems doesn't make housing more accessible -- but less, because it means families have to fill out dozens of applications processed by scores of administrators to have a decent chance of receiving assistance.

The time has come to streamline and simplify our programs so that they are governed by a single, integrated, coherent set of rules, delivered through a system that better aligns with the requirements of other financing streams and social service providers, be they federal, state, local, from the public, private or third sector of non-profits.

The second principle is that the key to meeting the long-term capital needs of HUD's public and assisted housing lies in shifting from the federal capital and operating subsidy funding structure we have today to a federal rental subsidy stream that can attract capital from private and other public sources.

Third, the time has come to bring our rental programs into the housing mainstream.

What do I mean by that?

Today, we have a parallel system where most families live in housing that is financed, developed and managed through mechanisms that can be integrated--literally and figuratively--with the communities around them -- while the two-and-a-half million poor families served by HUD's oldest programs live in another.

Only when all HUD-assisted housing is built, financed and managed in this 21st century way will we be able to attract the mix of uses, incomes and stakeholders that HUD needs to make its rental assistance programs truly successful -- and that families need to live in sustainable vibrant communities with real opportunity.

Fourth, we must combine the best features of our tenant-based and project-based programs to encourage resident choice and mobility. It's wrong that residents of public and assisted housing cannot choose where they want to live without losing the rental assistance that they need.

We know that real choice means informed choice -- that HUD must work with partners at the state and local level to ensure that families with vouchers can choose to move to neighborhoods of greater opportunity if they want to.

At the same time we recognize that HUD must refocus our programs to revitalize low-income neighborhoods to be true neighborhoods of choice -- with opportunity, safety, good schools and a mix of incomes. That is the goal of our Choice Neighborhoods initiative.

TRA reflects HUD's commitment to complementing tenant mobility with the benefits that a reliable, property-based, long term rental assistance subsidy can have for residents' peace of mind, neighborhood revitalization efforts and as a platform for delivering social services -- and to provide access to neighborhoods where vouchers can be difficult to use.

Now, I recognize that policies to "fix" public housing over the last two decades have often involved losing units available to house poor families in your communities -- either because the units were demolished or sold and not fully replaced, or because many of the replacement units went to families with higher incomes.

I also know that some worry about the so-called "privatization" of public housing, the risk that leveraging private debt may cause these properties to fall into foreclosure or the potential for tenants to lose their rights during this process. So, let me take a moment to address these concerns.

First and foremost, I am absolutely committed to preserving these precious resources, period. That is why TRA maintains targeting and affordability requirements for the lowest income families. That's why it prioritizes rehabilitation not demolition, and insists on strict one-for-one replacement.

Supported by our Choice Neighborhoods proposal to make the redevelopment of distressed public and assisted housing the anchor of broader community development efforts, we are absolutely committed to reversing the loss of units we've seen over the last 15 years.

Along the same lines, HUD's new Strategic Plan commits us to reducing homelessness and "worst case" housing needs over the next 5 years. To ensure we do not tackle this challenge alone, in May, President Obama will unveil the nation's first ever comprehensive federal strategy to end homelessness.

I expect to be held accountable for HUD's performance -- and for keeping this commitment.

Secondly, the changes we're proposing aren't about who owns public and assisted housing -- but how it's funded. For years, we've seen public sector owners dropping out for the simple reason that programs that fund private ownership are more sustainable. By allowing public owners to access the capital and resources private owners can today, we're leveling the playing field to make the preservation of publicly-owned housing possible.

Further, while it may be somewhat new for public housing to meet its capital needs through tax credits and private debt, this is how new housing has been financed for decades -- and having run HUD's multifamily programs and built and preserved tens of thousands of housing units in New York City, I've seen that for myself.

Third, I want you to know that I recognize the tenant rights we have today--in statute, regulations and case law--simply wouldn't exist were it not for people like those in this room. And I know the difference those rights have made in the lives of people.

But you know as well as I that thirteen different sets of rights governed by thirteen different programs doesn't serve anyone's best interests -- least of all the tenants or lawyers who have to navigate them.

That's why I've asked Barbara to lead an effort across our rental assistance programs to identify the best policies on a broad range of tenant issues.

In large part due to the National Housing Law Project, in the coming weeks, for the first time, HUD will be hosting residents from all its major rental programs to discuss this very issue -- to develop recommendations--from tenant organizing and resident participation rights, to supportive services, admissions policies and hearing rights--that should apply to all HUD-assisted tenants.

It's time we all spoke with one voice. To preserve these resources, we must.

Meeting the Housing Needs of Every Family

So, really, this is just beginning -- and we look forward to working with you through the budget process and with authorizing committees to ensure we get the transformation of our rental programs right.

I recognize change isn't easy. I recognize that it's hard enough for you to help families in these tough economic times, much less take on reform.

I mentioned The Truly Disadvantaged earlier. Of all the tragedies that book revealed, perhaps the most tragic was that the segregation of the very poorest families into the very poorest neighborhoods across the country didn't happen in spite of government policy -- but more often than not, because of it.

But that doesn't mean we have to accept it.

In America, we don't accept one public education system for one group of children -- and a better one for everyone else.

We don't accept one set of rules about what pollutants can be in the water some people drink -- and another set for the rest of us.

We don't accept a worse set of health outcomes for one population -- and another for everyone else.

So, why should we with housing -- with all that we know about how central housing is to creating a geography of opportunity?

Why shouldn't we make this right?

I hope the progress we've begun these last thirteen months has demonstrated that we in this Administration are as committed as you to meeting the housing needs of every family in this nation.

To putting HUD-assisted rental housing on a strong foundation for decades to come.

To building a truly integrated federal housing system that serves families better -- every family in every neighborhood in America.

That is our goal -- and in the days, weeks and months ahead, may we work together to build it.

Thank you.

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