Prepared Remarks of Secretary Shaun Donovan at the Next Generation Housing Policy Convening on Rental Housing

White House, Washington, DC

Wednesday, October 13, 2010

Thank you. Before we begin, let me thank the Domestic Policy Council, particularly Melody Barnes, as well as Larry Summers for their remarkable friendship and leadership on these issues. And Larry, we wish you the best in Cambridge.

Thanks also to the MacArthur Foundation for their partnership in this event. Through their support of research on rental market dynamics and significant efforts to preserve and improve existing affordable rental housing, they have helped put rental housing back on the policy map.

Let me also thank our extraordinary panelists for sharing their proposals with the Administration -- Delores Acevedo Garcia, Scott Bernstein, Willie Jones, Kate Durban, and Myron Orfield, as well as Mike Stegman for moderating this panel.

Melody and Larry have both spoken about why we need a balanced housing policy that supports homeowners and renters.

But a balanced housing policy is about more than the kind of homes we provide -- it's also about how we address the needs of communities, from those recently been hit by the foreclosure crisis to those places that have been losing population and suffering from disinvestment for decades.

Today, nearly 8 million people live in what we call "neighborhoods of concentrated poverty" -- surrounded by disinvestment, failing schools, troubled housing, and little opportunity.

Research shows that one of the most important factors in determining whether or not children will do better financially than their parents is not simply their family's economic status, but whether or not they grow up in one of these high-poverty neighborhoods.

As a result, we can predict health, economic, and educational outcomes of children based on where they grow up.

Imagine that: children's futures determined not by their talents or actions but on the zip code in which they are raised.

President Obama, Larry, Melody, and I believe we can do better -- and that getting there requires getting past old ideological divisions.

One of the first classes I took at Harvard was Bill Apgar's -- and we read John Weicher's seminal piece, "Why Vouchers Are Better," which argued that that choice was the option to move -- to be able to take responsibility for your future.

Those of you who know Bill might not be surprised to know that he thought the answer wasn't so simple.

Bill argued that real choice means also having the option to stay in decent, strong, well-maintained housing in your current neighborhood.

We've assembled this panel today in part because we do need both -- policies that benefit people and place.

This is a tension that HUD's charter recognized when the agency was created in 1965 -- that the department ought to not only be about housing but also about the neighborhoods and communities where that housing was located.

In the nearly half century since, we've seen new actors outside of government drive housing finance, climate change emerge as a serious threat to our economy and our planet alike and transportation costs increase five-fold.

Despite all these changes, when it comes to housing and community development, HUD and the Federal government, in many ways, have continued to exist in a time capsule.

And that's why we've asked all of you to come here today -- to help us to bring our programs into the 21st century and into the mainstream where they will have a greater impact on people and places.

Consider that four-and-a-half decades ago, affordable housing was largely built, owned and managed by government, with the emergence of Section 8 in the 1970's, the private role began to expand -- first to ownership of federally-assisted housing then, with the passage of the Low-Income Housing Tax Credit in 1986, to financing its production.

This shift wasn't just about who would be providing the resources, but more importantly, how they would be spent. Indeed, the discipline this emergence of the private sector has brought to the housing industry extends from the way affordable housing is financed to how properties are managed.

Perhaps even more important than the emergence of the private sector has been the emergence of a new "Third Sector" of non-profits and CDCs that have not only helped solve problems at the local level -- but gone on to become some of our most innovative affordable housing developers and key civic institutions in our neighborhoods.

These institutions know people -- and they know place.

And it was the participation of many of them that made the HOPE VI program to transform our most distressed public housing such a success.

HOPE VI wasn't just about tearing down buildings -- it was about tearing down ossified social and community development policies. It was about making the Federal government a partner to communities to build high quality affordable housing, with design patterns that attract people to live there.

With our Choice Neighborhoods demonstration soon underway, HUD will be bringing to bear private capital and mixed-use, mixed income tools to transform all housing in a neighborhood. Just as importantly, it will make non-profits and the private sector full partners in this transformation.

But we won't remake public housing with just five grants a year. HOPE VI has transformed the most troubled developments -- and while we hope Choice Neighborhoods will transform many more, to really take the lessons we have learned to scale in communities across the country, we need to embed these principles into our broader public housing policy.

That is the goal of the Obama Administration's Transforming Rental Assistance initiative -- or "TRA."

TRA would not only allow public housing leverage public debt to meet its capital needs--as virtually all other forms of affordable housing can--it will also bring all our affordable housing programs into the 21st century by bringing simplicity and choice to the system.

First, the Federal government will get its house in order -- and get out of the way. Instead of the 13 different rental assistance programs residents and owners have to navigate through now--each with its own rules, managed by three operating divisions--TRA will establish common sense rules and protections across all HUD-funded rental assistance programs.

Second, we will provide real choice. Instead of telling residents of public and assisted housing that they can't move to a different neighborhood because moving means giving up their subsidy, TRA reflects the Obama Administration's belief that families should be able to choose where they live and take responsibility for their futures.

And third, we will put an end to the "separate but inherently unequal" housing system in America.

The Low-Income Housing Tax Credit is the single most important capital source for funding affordable housing. It was responsible for about half of all multifamily production in the 1990s. And one of HUD's biggest programs has virtually no way of accessing it.

Instead of a parallel housing system that prevents the two-and-a-half million poor families served by HUD's oldest programs from living in housing that is financed, developed and managed in a way that can be integrated with the communities around them, TRA will encourage a mix of uses and incomes that link public housing to investments in neighborhood schools, local businesses and other community anchors.

The most obvious benefits of TRA will be to residents -- but they won't be the only ones to see these improvements.

I believe TRA will be the first step toward seeing affordable housing not as a "neighborhood problem" -- but as the asset to our communities that so many of us in this room know it can be, with the right tools and the right partners at the table.

An asset that is, in many ways, invisible to the naked eye.

Of course, New Partners aren't all that's changed about affordable housing in the last several decades. We have a New Geography as well. Where America's cities were literally burning at the time of HUD's founding, today the old city/suburb stereotypes are breaking down, and our metropolitan areas are emerging as engines of innovation and economic growth.

So, today's discussion is also about how we design policies that reflect this New Geography -- and connect housing to jobs and opportunity at the regional level.

That's why this month, the Administration will be making the biggest investment in planning in a generation -- making $100 million available to regions to bring down the combined cost of housing and transportation for families, which now consumes 50 cents of every dollar families earn.

And while I know Scott Bernstein will speak about this subject in more detail, let me simply say that planning our communities better means parents will spend less time driving and more time with their children, more families will live in safe, stable communities near good schools and jobs, and more businesses will have access to the capital and talent they need to grow and prosper.

Whether it is housing-specific resources like Choice Neighborhoods and TRA, new financing tools for transit-oriented development, or incentives that encourage the repurposing of polluted land for affordable housing development, these tools all serve the same fundamental purpose:

They help usher in a new era of partnership at the federal and local levels that recognizes one size doesn't fit all -- and that different markets have different needs and face very different challenges.

They recognize that the key to unlocking the potential of our communities and our economy begins with creating a true geography of opportunity for our children -- one that ensures their futures--and their choices--are no longer limited by something as arbitrary as the zip code they grow up in.

That is what a balanced housing policy is about. And it's why I'm pleased to be a part of building it with each of you today. Thank you for your participation -- and let's get the panel started.

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