Prepared Remarks of Secretary Shaun Donovan at the 2010 Vermont Statewide Housing Conference

Hilton Burlington, Burlington, Vermont

Thursday, November 18, 2010

Thank you, Senator Sanders, for that generous introduction, and for your extraordinary efforts on behalf of Vermont families. You're a friend -- and you're a champion for the people who need one most. Thank you.

I'd also like to thank Sarah Carpenter and Maura Collins of the Vermont Housing Finance Agency for their hard work in organizing this event.

It's a pleasure for me to be here, because for years, this conference has been about bringing together the professionals who keep Vermont's neighborhoods strong, and its most vulnerable families in the safe, stable housing they need.

So to all of you who do that important work on behalf of those neighborhoods and families -- thank you.

We gather at a critically important moment -- when all of us are working to restore the foundation upon which we build our lives:

Home. It's the source of a family's stability and the very building block with which we forge our neighborhoods, put down roots, and build the communities that are the engines of our economic growth.

So let me share with you how HUD's using this unique moment--just as you are here in Vermont--not only to recover from the economic crisis, but to lay the groundwork for the more sustainable foundation Vermont communities need.

Stopping the Bleeding, Addressing the Crisis

We all know what a tough time it's been, not only for Vermont but for communities across the country. When President Obama came into office, housing prices had declined for 30 straight months. While we are not out of the woods, we've put a stop to that slide. Homeowner equity started growing again in the second quarter of 2009 -- to date, increasing over a trillion dollars, or close to $14,000 on average for the nation's nearly 78 million homeowners.

Central to much of this improvement has been the FHA, which since we took office has helped nearly 3 million Americans either purchase a home, or refinance into more stable, affordable mortgages.

FHA has also helped more than a half million families keep their homes. Combined with the Treasury Department's HAMP program and other modification efforts, more than 3.5 million borrowers have received restructured mortgages since April of 2009 -- nearly three times the number of foreclosures completed in that time.

But the job isn't over. Even though we've created jobs in the private sector for ten consecutive months, too many people, here in Vermont and across the country, are still looking for work and wondering if they will be able to make the next mortgage payment.

And where bad loans were driving foreclosures when this crisis started three years ago, today it's the damage those bad loans inflicted on our economy. As a result, countless people who have lost their jobs through no fault of their own lack the steady income they need to pay their mortgage.

That's why HUD announced our $1 billion Emergency Homeowner Loan Program, which will target over $4.3 million to Vermont's families.

Passed as part of the Dodd-Frank Wall Street Reform bill that became law this summer, the Emergency Homeowner Loan Program will provide bridge loans of up to $50,000 that help families keep up with their mortgage payments while they look for work. And we expect borrowers in Vermont to be able to apply for these loans through NeighborWorks affiliates before the end of the year.

Obviously, the Emergency Homeowner Loan Program is only one important tool in our toolbox as we fight to continue our nation's economic recovery. And it won't help every family struggling to keep their home.

But with this commitment to helping responsible homeowners who have fallen on tough times, President Obama, and I believe we can tackle tough challenges and fight foreclosures and unemployment. And we can help our communities recover -- in Vermont, and across the country.

Rebuilding Communities Through the Recovery Act

Indeed, at HUD we've been focused on the problem of foreclosures since the economic crisis began. We all know foreclosures not only devastate the lives of homeowners -- they also tear apart the fabric of entire neighborhoods.

That's why HUD has invested $7 billion in three rounds of Neighborhood Stabilization funding to support those communities hardest-hit by foreclosures.

Thanks to the Neighborhood Stabilization Program, Vermont has received more than $15 million to help communities struggling with foreclosure turn vacant and abandoned homes into the affordable housing families need. Here in Vermont, these funds have helped communities acquire and renovate 40 homes and create 175 good-paying jobs -- jobs that can't be outsourced.

And more help is on the way as HUD recently provided a third round of NSP funding, including another $5 million for Vermont through the Dodd-Frank Wall Street Reform bill.

But some of the most important affordable housing investments occurred through President Obama's Recovery Act.

At the same time the Recovery Act is jumpstarting the development of 32,000 affordable homes across the nation that were stuck in the pipeline by the recession through $2.25 billion in the Tax Credit Assistance Program, a $4 billion infusion of Public Housing Capital Funds to communities across the country is helping our PHAs make long-needed capital improvements to their properties.

In all, in less than 21 months, the Recovery Act has already helped renovate over 315,000 homes, with nearly 18,000 new homes under construction. And in places like Barre City's Washington Apartments here in Vermont, these funds have helped renovate homes to green standards with energy efficient improvements, saving money for residents and owners alike.

At the same time, the Homeless Prevention and Rapid Re-Housing Program, which has provided some $3.4 million to Vermont, has prevented and ended homelessness for more than three quarter of a million people -- a milestone we just announced yesterday.

And with the number of sheltered homeless families in rural areas increasing from 27 percent of the total homeless population to almost 40 percent over the last two years, this tool has been particularly critical for our rural communities.

I think most people would be shocked to learn that rural areas have a family homelessness rate that is almost double that of cities -- in large part because rural areas often have fewer shelters and resources for people to turn to in a time of need. And according to the Council for Affordable and Rural Housing--and as anyone who works on homelessness in rural America knows--most families in rural places who would otherwise be on the street live in cars, doubled up, or in grossly substandard housing.

That's why I'm proud to say that no less an authority than the U.S. Conference of Mayors reports that HPRP is "fundamentally changing" the way communities respond to homelessness at the local level -- keeping people in their homes rather than waiting for them to become homeless, and quickly returning those who do fall into homelessness to the stable, permanent housing they need.

Indeed, in many ways it was HPRP that paved the way for Opening Doors--the first ever federal strategic plan to end homeless--which I was proud to present to President Obama earlier this year -- and which wouldn't have been possible without the efforts of so many here in this room.

The most far-reaching and ambitious plan in our history to put our nation on the path toward ending all types of homelessness and the culmination of more than a decade's work in communities around the country, this plan will end chronic homelessness and homelessness among veterans in five years, while ending homelessness for families, youth, and children within a decade.

And by working with USDA to identify how we can further engage their Food Stamps and Rural Development programs to break down federal agency silos--and by taking advantage of a new Rural Housing Stability competitive program created by the HEARTH Act that will be used by communities to prevent homelessness and house those who are homeless--we can ensure this plan makes the biggest possible impact in rural America.

Vermont, of course, has been a leader in the fight to prevent and end homelessness -- using NSP dollars to help house homeless families and more than doubling the use of HUD homeless funds for permanent housing in the last five years.

Indeed, the Brattleboro Area Drop-In Center, led by Melinda Bussino, was recently recognized by our partners at the Department of Health and Human Services for its remarkable work supporting homeless individuals -- and helping us learn more by collecting better data.

I believe Melinda is here today. Melinda, it's people like you that have proven that we can house anyone.

Our job now is to house everyone -- to prevent and end homelessness. All homelessness.

And with this plan, we will.

Indeed, with these historic investments, a FY2010 budget that includes full funding for the Public Housing Capital Fund Operating Subsidy, and a 2011 budget that proposes, even in a very tough fiscal environment, a record number of people to be served by the Housing Choice Voucher program, it's clear:

The Federal government is back in the affordable housing business.

And it's about time that we are.

Building Sustainable Communities

Of course, to truly ensure that all Americans can afford to live in communities with access to employment, schools and transportation options, we need to nurture strong, robust, and vital rural communities.

And we're doing just that. Last month, with our partners in the Department of Transportation, HUD awarded nearly $170 million in planning grants to ensure regions and communities across the country have more housing and transportation choices, more energy independence, and will be more economically competitive.

But those grants weren't just about cities or suburbs. In fact, our Sustainability grants included a $25 million set-aside for communities with populations of a half-million or less.

And we took it one step further to ensure that some of the funding would be awarded to even smaller communities, targeting areas with less than 200,000 people.

For these funds, we were inundated with applications from 50 states, two territories and the District of Columbia. For the Sustainable Communities Regional Planning Grant Program alone, 52 percent of applicants came from small towns and rural regions -- each offering bold, unique proposals to plan and build sustainably based on their own local resources, landscape, culture and ingenuity.

I'm proud that we awarded a nearly $1 million regional planning grant to the Chittenden County Regional Planning Commission here in Vermont -- to help towns and cities across the county address common challenges including public safety and health, housing, transportation and natural resource management.

Burlington received a $286,000 Challenge grant jointly awarded by HUD and DOT as well -- to promote transit and housing affordability in the city's downtown and waterfront areas.

Bringing together actors from government, the private sector, academic institutions like the University of Vermont's Center for Rural Studies, and numerous others, each of Vermont's applications had the right partners -- and the right vision for success.

But our partnership with DOT and EPA isn't limited to the grants we award. We've formed an interagency working group on rural and small town communities with USDA that has been meeting for several months to see how we can better align our programs to serve smaller communities and regions.

As HUD Secretary, I've had the opportunity see rural America up close -- in Montana, Alaska, North and South Dakota, Maine, and here in Vermont. There I've seen how different communities have very different needs -- and face vastly different challenges.

And so, I'm excited that early next month HUD will be making funds available for our $25 million Rural Innovation Fund. The new fund will update and improve the Rural Housing and Economic Development program by supporting larger-scale innovative approaches to addressing unique rural issues -- including housing distress and community poverty and bolstering our capacity to catalyze change in rural America. And it reflects months of listening to stakeholders who know these communities best.

Because when it comes to strengthening rural communities--when it comes to building vibrant, sustainable communities of opportunity and choice for all Americans--you know one size doesn't fit all.

And it's long past time the Federal government understood that as well.

Transforming Rental Assistance

Of course, when most people hear the term "sustainability" -- they think of environmental sustainability. But this audience knows full well that you can't have a sustainable community if you have an underlying system that promotes segregated development patterns and isolation.

By now, many of you are probably familiar with HUD's Choice Neighborhoods initiative -- which builds on and improves the legacy of HOPE VI by bringing to bear private capital and mixed-use, mixed income tools to transform not just Public Housing, but all housing in a neighborhood. Just as importantly, it will make the non-profits and the private sector who participated in HOPE VI full partners in this transformation.

But everyone in this room knows that America's public housing won't be remade with a handful of grants a year.

Right now, HUD's Public Housing program faces a backlog of unmet capital needs that could be as high as $30 billion.

The challenge isn't limited to public housing. Older programs that subsidize more than 45,000 units of privately owned affordable housing lack any real strategy that would keep them affordable for the years to come.

Already, our country has lost 150,000 units of public housing in the last 15 years -- 10,000 homes a year, every year for fifteen years.

That is why President Obama and I have proposed a 21st century strategy to preserve affordable housing for America's most vulnerable families that we call Transforming Rental Assistance.

As I mentioned earlier, we were able to provide an additional $4 billion in public housing capital funding as part of the Recovery Act last year.

But let's be clear: that funding at best meets a fifth of the estimated capital backlog in public housing properties. And given the size of the federal deficit and the very difficult fiscal environment that lies ahead, it's clear the Federal government will not be able to finish the job alone.

And failing to finish the job means the billions the government has invested in our public and assisted housing stock over the last seventy years will be lost forever. The programs touched by TRA house over 4 million households, nearly two thirds of which are extremely low income, and two-and-a-half million of whom are elderly or disabled.

That's why we are proposing to shift the current public housing capital and operating subsidies to a single rental subsidy stream that will attract capital from private and other public sources -- $7 billion in the first year alone and $25 billion in all.

That's $25 billion sitting on the sidelines right now that could be invested in public housing but can't be because of antiquated rules that were developed nearly a half century ago.

At the same time TRA would infuse our public housing system with the capital it needs to preserve this housing, it would also improve that system in three key ways.

The first is simplicity. 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.

As the owners and operators of public housing in this room could surely tell you, no one would ever intentionally set up a system this complicated.

And we've seen how this proliferation of programs and delivery systems makes their job providing housing to families much, much harder.

Indeed, many of our nation's public housing authorities--including those of you in Vermont--have become real innovators and entrepreneurs. But the barriers this system throws up to using other financing streams and working with social service providers makes you do that job with one hand tied behind your back.

And smaller communities are further penalized -- because having fewer resources means the lack of flexibility comes at an even steeper cost.

Small PHAs house nearly 180,000 elderly or disabled households, which make up 18 percent of all public housing households. And so these communities, many of which are in rural areas like Vermont, face not only an aging housing stock -- but a more rapidly aging population.

As a result, I imagine many the PHA owners in this room are looking at your portfolio not only thinking about repairing a boiler or replacing a leaky roof -- you're also trying to figure out how to make your properties accessible to wheelchairs and on-site services.

TRA will give smaller communities more resources -- but also more flexibility to use those resources.

The time has come to make our programs easier to use -- so that our local partners can focus more on the needs of your communities and less on complying with inflexible, one-size-fits-all rules.

The time has come for the Federal government to get its house in order.

The second principle is choice. Today, too many residents of public and assisted housing can't move to a different neighborhood to find a better job or further their education because moving means giving up their subsidy. That's not right.

TRA reflects our belief that families should be able to choose where they live without fear of losing rental assistance.

The third principle is community.

Everyone in this room knows that you can't have a truly sustainable community if you have a system that promotes segregation and isolation.

But quite frankly, that's what the current system does.

And to be clear: that's not the fault of our PHAs. It's because most families live in housing that is financed, developed and managed in a way that can be integrated with the communities around them, while the two-and-a-half million poor families served by HUD's oldest programs don't.

TRA will put an end to the parallel housing system in America by encouraging a mix of uses and incomes that link public housing to investments in neighborhood schools, local businesses and other community anchors.

Just as importantly, we estimate it will create more than 300,000 jobs -- building and preserving affordable housing in the communities that need it most and providing jobs for the people who need them most.

And today, Congressman Keith Ellison will introduce the Rental Housing and Revitalization Act, which builds on our original TRA initiative and incorporates the feedback of stakeholders across the country.

Reflecting months of listening to the people who know our public housing best, he's made some very important changes to our proposal -- from iron-clad protections to maintain public ownership and requirements for properties to remain permanently affordable, to a more workable resident choice option and the strong, fair resident rights families who live in these properties deserve.

At HUD, we think that Congressman Ellison's legislation holds enormous promise -- and we think once you get a chance to study it, you'll agree.

A New Era of Partnership

For me, for President Obama, and for Senator Sanders, all this work comes down to a very simple belief:

That no matter where you live, when you choose a home, you don't just choose a home.

You also choose schools for your children and transportation to work.

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 the zip code they grow up in.

Like our President, I know change is never easy -- that revitalizing our nation's communities, rural, urban and suburban won't happen overnight. Nor will it happen because of any one policy or the work of any one agency or one party.

But working together, in common purpose--in partnership--we can tackle our toughest challenges.

We can push back on this crisis.

We can build upon the remarkable change and sense of possibility you're catalyzing in communities across the state.

And most important of all, we can create a geography of opportunity for every American -- and every family.

Ensuring we do is our goal today. Let us rise to meet it.

Thank you very much for having me here today.

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