Prepared Remarks for Secretary of Housing and Urban Development Shaun Donovan at the National Low Income Housing Coalition 2010 Annual Housing Policy Conference

L'Enfant Plaza Hotel
Washington, D.C.
Tuesday, April 13th, 2010

Thank you so much, George, for the warm introduction -- and for your leadership as the Chair of the Board of Directors.

And let me take a moment to thank and recognize your president, Sheila Crowley -- who, day in and day out, continues to advocate for the housing needs of the very lowest income American families, families who need their voices to be heard in Washington like never before.

Sheila understands that fundamentally, housing policy isn't about rules and regulations. It's not about bricks and mortar.

It's about human beings.

Indeed, I am honored to serve as HUD Secretary for the same reason that drives Sheila each and every day, and for the same reason that brings us all together here today -- to make a difference in the lives of those our society has too often forgotten. Thank you, Sheila.

And over the past year, since I last spoke to you, I believe that we have made a difference.

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

And for the field of housing policy in particular, it's been an incredible year of change -- change that comes from having a President that understands the critical importance of affordable housing and investing in our cities, our neighborhoods, and in our communities all across this country.

So today I'd like to talk with you about what a difference a year can make -- how, with your help, and since I last addressed this gathering, we've made critical progress in providing for our nation's most vulnerable families. And together, I'd like to look ahead -- to share with you our work at HUD to transform the affordable housing landscape, and put the work we do on sustainable footing for the years to come.

New Team at HUD

Last year when I spoke to you, I was still putting together what's now been dubbed as HUD's "Dream Team."

That team is now hard at work -- and at this conference alone, HUD is strongly represented with nearly twenty of my staff here to work side-by-side with you.

From Sandi Henriquez, Assistant Secretary for Public and Indian Housing; to John Trasviña, Assistant Secretary for Fair Housing and Equal Opportunity; to Carol Galante, Deputy Assistant Secretary for Multifamily Housing; to Barbara Sard, senior advisor on rental assistance; to Bill Apgar, senior advisor on mortgage finance--who both served your board prior to me stealing them--I'm thrilled to have such a capable and passionate senior team on board.

Economic Recovery

With this team in place, over the past year, we've been able to fully implement the Recovery Act to help the most vulnerable -- and respond swiftly, aggressively, and most of all, comprehensively, to the housing and economic crisis.

First, I'm proud that the Recovery Act put in place a safety net for those harmed most directly by the economic crisis -- extending and increasing unemployment insurance for 12 million Americans who lost their jobs and making COBRA available so they could keep their health care.

When I was here last year we had already provided nearly $3 billion in Public Housing Capital funds to over 3,100 public housing authorities nationwide.

And we set a strict one year deadline for those authorities to commit the funding to specific projects with every single dollar they had. I'm pleased to say that at the one year mark on March 17th PHAs had obligated 99.9 percent of their Recovery Act formula funds, creating or retaining nearly 9,000 jobs and developing or rehabbing 150,000 units and counting.

Meanwhile, two Recovery Act programs--the Housing Tax Credit Exchange Program and the Tax Credit Assistance Program--are jumpstarting affordable housing developments stalled by the collapse of the Low-Income Housing Tax Credit market. These two programs together will create an estimated 126,000 units of affordable housing or rehabbed affordable housing while simultaneously creating tens of thousands of jobs -- and I've seen progress of this for myself all over the country.

Whether it's Will Straw, a father of three and a 30 year veteran of the construction industry who'd recently been put back to work.

Or Cornelius Carey -- who didn't have consistent work for over a year, but is now working full-time as a construction worker at City Arts. Thanks to the Recovery Act, instead of wondering what's next, Will and Cornelius have jobs, stable incomes, and a reason to be hopeful.

And let me assure you that as these jobs are created we are stepping up our enforcement of Section 3, ensuring state and local governments that receive HUD funding are giving job opportunities to low-income workers and public housing residents.

Last year I told you we would take immediate action to try and prevent homelessness. With the Homeless Prevention and Rapid Re-Housing Program, we have. With HPRP, we've helped over 64,000 families -- and begun reorienting the Federal government toward preventing homelessness as our partners on the ground across the country have begun doing over the last few years.

And next month, as chair of the Interagency Council on Homelessness, I will deliver to President Obama the first ever comprehensive federal strategy to end homelessness.

And last year I told you about the immediate steps we were taking to help the thousands of families at risk of losing their homes by the ending of the Disaster Housing Assistance Program. And I'm proud to say that with our partners in the Administration, we brought together nearly 350 public housing agencies from all over the country to provide customized case management and permanent housing solutions to those 30,000 families displaced from their homes by Hurricanes Katrina and Rita.

I was in New Orleans this weekend, my fifth visit to the city as Secretary. I attended a ribbon cutting to celebrate the re-opening of one of the Big Four developments and I participated in a Housing and Community Development and Infrastructure working session with Mayor-elect Landrieu's Transition team.

That session reminded me that no city more deeply demonstrates the need to plan and build our communities--our homes, schools, transportation, and job centers--so that they provide the most opportunities and choices to the people who live there in New Orleans.

And I also experienced tremendous excitement and possibility in a city that didn't know those emotions. From the incoming mayoral team to the hundreds of planners from across the country gathered for the American Planning Association conference. And the sense of possibility is being made real thanks to the unwavering commitment to New Orleans from group like the National Low Income Housing Coalition and a President who has made the city's revitalization one of his Administration's very highest priorities. With your help, we will make it right in New Orleans.

And when I spoke to you a year ago our housing markets were in turmoil and many were predicting a second Great Depression. A year on, we are not out of the woods. But due to the Obama Administration's swift and comprehensive approach--helping to maintain low mortgage interest rates, ensure mortgage credit access, provide tax credits for homebuyers, modify families' mortgages, and revitalize communities overrun with foreclosures--the housing market did significantly better in 2009 than nearly anyone predicted a year ago.

Indeed, home prices have stabilized and home owner equity started to grow again in the second quarter of 2009. And confidence derived from increased home equity has helped the economy grow at the fastest rate in six years and helped to create 162,000 jobs last month.

Through the Making Home Affordable Program, we are working to help families keep their homes.

While the program had a slow start, we can't forget that 1.1 million immediate foreclosures have been avoided because of HAMP trial modifications, saving these households an average of over $500 per month in mortgage payments. And an additional 650,000 FHA homeowners that were experiencing financial difficulty were assisted through FHA's variety of loss mitigation options. In addition to this, we've proposed a 50 percent increase in HUD's housing counseling budget.

And where the challenge before was bad loans, the challenge now is the havoc those loans have wreaked on our economy -- leaving responsible homeowners unemployed, with many owing more on their homes than they are worth.

That's why we recently made a series of changes to HAMP and FHA that will give some unemployed borrowers relief as they look for work -- and provide underwater borrowers with the option to refinance into safe, affordable FHA loans.

But we understand that the foreclosure crisis didn't just impact homeowners -- it also impacted renters as well. That's why we've been proud to work very closely with the National Low Income Housing Coalition to ensure the passage, and implementation, of the Protection of Tenants in Foreclosure Act.

Of course, we can't stop every foreclosure. That's why, through $6 billion in Neighborhood Stabilization funds, we're helping turn abandoned and foreclosed homes that drag down property values into the affordable rental housing communities need.

Investing in People and Places

Indeed, while the housing recovery is still fragile, our work this first year enabled us to begin stabilizing the housing market and the broader economy.

But as we continue this work, now is the time to look toward more fundamental reforms to prevent a crisis of this magnitude from ever happening again.

This requires a comprehensive, balanced national housing policy that supports homeownership, but that also provides affordable rental housing and brings public housing and other forms of assisted housing into the 21st century.

It requires providing real opportunity for people living in neighborhoods of concentrated poverty and segregation, offering choices to help families live closer to jobs and schools.

And, as I promised you last year, it requires putting the Federal government back in the business of affordable rental housing. That's why, at a time when our families need it most the HUD budget for this year fully funds the renewal of all project-based and tenant-based rental assistance contracts, and for the first time in nearly a decade, also fully funds the Public Housing Operating Subsidy.

And in February, we offered a proposed FY11 budget that builds on these successes, even in a very difficult fiscal environment-- including a nearly $200 million increase in homeless assistance funding, a record number of people to be served by the Section 8 voucher program and a billion dollars to capitalize the National Housing Trust Fund.

We must work together to ensure that the Fund--a key Obama administration priority--is capitalized this year. Right now, we're working closely with our partners in Congress--including Senate Majority Leader Harry Reid, Senator Jack Reed, House Majority Leader Hoyer, Chairwoman Waters, Chairman Levin, and Chairman Frank-- to make it happen. I know I can count on you to continue fighting for funding for this critically important initiative.

Transforming Rental Assistance

But you know as well as I do that it's not just about more resources or providing them more quickly. It's about making the resources we do provide work better and more effectively. Because every dollar we save by making programs more efficient is another dollar that supports extremely low-income families. Many of you are no doubt familiar with our Transforming Rental Assistance proposal, and I am grateful for the optimism with which the National Low Income Housing Coalition has welcomed the proposal and engaged in constructive dialogue. Let me share with you the four principles that anchor our TRA initiative.

First, you know as well as I 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.

No one would ever intentionally set up a system this complicated. Can we agree on that?

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 these 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 -- and better serves tenants.

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

Tomorrow, in large part due to the leadership of the National Low Income Housing Coalition and the National Housing Law Project, for the first time HUD will be hosting residents from all its major rental programs to discuss this very issue and 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.

We have held four major convenings with stakeholders since October, focused on each of the three major rental assistance programs, and one just with public housing residents. In addition, HUD staff participated in a webinar with voucher program participants convened by the National Housing Law Project on initiatives in the Housing Choice Voucher Program. And in preparation for tomorrow's convening, senior staff held a webcast on TRA for residents of all programs on March 29th.

It's time we all spoke with one voice. To preserve and expand rental assistance resources, we must. We need to be fighting together for resources, not fighting against each other for a larger share of a smaller pie.

The second principle of TRA is that the key to meeting the long-term capital needs of public housing lies in shifting from the our current federal capital and operating subsidy funding structure to a federal rental subsidy stream that can attract capital from private and other public sources. 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.

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

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.

Over half a century ago, in 1954, the Warren Court's unanimous decision in Brown vs. Board of Education stated that "separate educational facilities are inherently unequal." Well, a separate housing system for low-income families is also inherently unequal. Let's work together to complete this unfinished business of the Civil Rights movement.

That can only happen when all HUD-assisted housing is built, financed and managed in a 21st century way will we be able to attract the mix of uses, incomes and stakeholders that we need to make our rental assistance programs truly successful -- and ensure that families need to live in sustainable, vibrant communities of opportunity.

Fourth, we must combine the best features of our tenant-based and project-based programs to encourage resident choice and mobility. It's simply 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's why HUD will work with partners like you at the state and local level to ensure that families with vouchers can choose to move to neighborhoods of greater opportunity with the information and support they need.

Creating True Neighborhoods of Choice

But we also know that choice isn't always about moving -- it's about having the choice to stay in a community with opportunity, safety, good schools and a mix of incomes. That is the goal of our Choice Neighborhoods initiative.

There's no question that the HOPE VI program has become one of our country's most powerful weapons to fight concentrated poverty and rebuild distressed public housing.

HOPE VI made the Federal government a partner, emphasizing mixed-income communities, leveraging financing, and incorporating supportive services.

At its best, HOPE VI changed the world outside the development gates -- reducing neighborhood poverty, crime, and unemployment…increasing income and property values…and spurring investment, business growth, and jobs.

Indeed, over time, HOPE VI transformed--in the best cases--from a housing program into a dynamic way communities could learn from best practices -- encouraging participants to invest in the most catalytic and meaningful neighborhood impacts.

It is that foundation that we seek to build upon with Choice Neighborhoods. Choice Neighborhoods celebrates HOPE VI's successes, but also learns from its mistakes. And it gives communities more tools to tackle their interconnected needs.

By expanding the HOPE VI toolkit to allow for the redevelopment of private and federally assisted properties alongside public housing, Choice Neighborhoods will bring disinvested properties that had no tool for redevelopment under the HOPE VI umbrella.

We learned from HOPE VI that even though it was possible to replace the entirety of units being redeveloped--either on site or elsewhere in the neighborhood--in some tight housing markets, desperately needed affordable homes were lost through demolition.

On this point, no one has been more articulate, passionate, or persuasive than Sheila Crowley. She says that if even one person falls into homelessness as a result of this effort, that's one person too many.

And I absolutely agree.

That is why our proposed Choice Neighborhoods legislation includes a strengthened one-for-one replacement requirement, in which demolished or disposed-of units must be replaced by hard units. Vouchers may serve as replacement units only in limited cases, where there is an adequate supply of affordable rental housing in areas of low poverty -- and a proven track record of success in the use of vouchers.

All the work I've described to you today to put the Federal government back in the business of affordable rental housing is not only represented in our budget this year or next year -- "meeting the need for quality, affordable rental homes" is one of the central goals in HUD's 2010-2015 Strategic Plan, which we will release in a few weeks, and which will guide our work for the next five years, up to HUD's 50th anniversary.

We engaged over 1,500 internal and external stakeholders in developing this plan, which we will be releasing shortly. I would add that we have modeled the way we will evaluate much of our progress on your own annual Out of Reach study -- which has become the standard by which communities around the country measure housing affordability. And we know you will hold us accountable for the results we produce.

Healthcare

And so from the start of economic recovery to the revitalization of the Gulf Coast to charting a new future for affordable rental housing, it has been a year of making history since I spoke to you last. And no achievement of the year has been more historic than the passage of comprehensive healthcare reform. I had the great fortune to be at the World Urban Forum last month in Brazil on the night healthcare was passed.

It was there that I had the honor of sharing the news that the United States had finally passed health care reform -- that 31 million Americans were going to finally have the affordable health insurance they need.

The roar of that crowd reminded me that the work we are all doing--in government, non-profits, or foundations--is not only changing lives -- it's changing the world.

It reminded me what a special moment in our history we live in -- and what a special obligation we have to seize this moment to ensure that we emerge from this crisis stronger than we were before.

The Geography of Opportunity

Like all of you, I'm committed to helping America's most distressed neighborhoods tackle their toughest challenges -- from crime and disinvestment, to the lack of educational and economic opportunity, to housing decay, be it public housing, Section 8, or any other kind of distressed housing.

Because if a century of housing policy has taught us anything, it's that if there isn't equal access to safe, affordable housing in neighborhoods of choice, there isn't equal opportunity.

And if our work together has taught us anything, it's that building communities in a more integrated and inclusive way isn't separate from advancing social and economic justice and the promise of America -- it's absolutely essential to it.

It's inseparable from the idea that, in America, our children's hopes and our dreams should never be limited by where they live. Ensuring they never are is our goal today. In the year ahead, let us rise to meet it.

And with that, I would love to take your questions.

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