Prepared Remarks of Secretary Shaun Donovan at the US Conference of Mayors 79th Winter Meeting

Capitol Hill Hilton
Friday, January 21, 2011

Thank you, Mayor Warren -- for that very generous introduction. I want to recognize Conference President, Mayor Elizabeth Kautz, for her leadership.

I've enjoyed the opportunity to meet with many of you one-on-one these last several months -- to discuss a broad range of issues, from foreclosures and homelessness to energy and climate change.

It's a pleasure to be back with you again this year to address the full winter meeting.

I saw many of you earlier today with the President. It's always great to meet with our nation's mayors -- men and women who understand the importance of putting aside differences to solve problems that make a difference in people's lives.

Today, I want to talk about the new tools HUD is providing and partnerships this Administration is forging to do that.

Strengthening Our Economy

But first, I want to say a few words about this important moment for our economy.

We all know how difficult these last few years have been for our communities.

When the President took office, it was only weeks after the Bush Administration and Congress had taken dramatic steps to prevent a financial meltdown -- and still, we were staring into an abyss. Experts across the political spectrum said we were headed for a Second Great Depression.

We were losing 753,000 jobs a month and in the middle of 22 straight months of job losses and 30 straight months of home price declines.

The dramatic but urgently needed steps we took--to help families keep their homes, to keep our housing market afloat, and to provide critical assistance to communities through the Recovery Act--had an impact that is undeniable.

Nearly 4 million borrowers have received mortgage modifications since April 2009 -- more than twice the number of foreclosures completed during that time.

We stopped the slide in home prices.

And most important of all, we stopped the slide in job losses -- and have seen 12 straight months of job growth in the private sector.

None of which is to say we are out of the woods. Our unemployment rate is still unacceptably high. Given the millions of people the recession put out of work, we've got a lot of work ahead of us.

That's why the bipartisan tax cut package signed into law by the President was so important.

Because of President Obama's leadership, 159 million Americans will get a tax cut worth $1,000 for a typical family making $50,000 per year.

Twelve million families will benefit from a $1,000 child tax credit. Eight million students and their families will benefit from a yearly $2,500 tuition tax credit to make college more affordable. And six-and-a-half million families with 15 million children will benefit from an expanded Earned Income Tax Credit.

The Council of Economic Advisers estimates that the full year extension of emergency unemployment benefits will create 600,000 jobs this year alone.

This package's focus on high impact, job creating tax cuts will have significant repercussions for our housing market and construction industry, which have traditionally been cornerstones of economic recovery.

Because of this package, businesses in your communities now have new tax incentives to buy equipment and make the investments in research and development that help them hire and grow.

The expensing provisions alone could generate more than $50 billion in additional investment in the U.S. in 2011 -- helping our construction industry buy the new equipment it needs to create good-paying jobs in your communities.

The package also extends a tax credit of up to $2,000 for builders of residential homes that are more energy efficient, and it extends the Gulf Opportunity Zone tax credits -- which will ensure that more than 6,000 affordable housing units are able to be completed and support some 13,000 construction-related jobs in communities still recovering from Hurricanes Katrina and Rita.

These responsible temporary measures will not worsen the deficit over the long term by one cent.

Because of them, independent experts now expect another 1.5 million jobs or more will be created in 2011 -- lifting our economy and our communities alike.

Helping Communities Recover

Of course, our nation's mayors have been hard at work helping our communities recover for quite some time. And many of the tools you've been using were provided through the Recovery Act.

Indeed, we provided almost three-quarters of HUD's $13.6 billion in Recovery funds directly to localities because we believed you best understood the needs of your communities -- and that you knew how to ensure these dollars benefited the people and the neighborhoods who needed them most.

And you have delivered. With your leadership, HUD's Recovery programs have helped renovate over 358,000 homes and build more than 3,600 new homes in communities across the country -- many to green standards with energy efficient improvements, saving money for residents and owners alike.

With funds from the Homelessness Prevention and Rapid Re-Housing Program, our mayors have helped us prevent or end homelessness for more than three-quarters of a million people -- "fundamentally changing," as you reported last year, the way communities respond to homelessness.

And as Mayor Villaraigosa and I noted during the release of the Conference's hunger and homelessness report late last year, this progress is not only occurring in central cities but also in suburban and rural places where family homelessness has increased by 30 percent in recent years.

Most important of all, HUD Recovery programs created more than 27,000 jobs in the third quarter of last year alone.

None of this would have been possible without the leadership of our nation's mayors -- and I want to congratulate each of you for helping HUD obligate 100 percent of our Recovery funds a full month ahead of schedule.

You've shown the same tenacity with the first round of Neighborhood Stabilization funds. And I want to congratulate each of you for meeting your NSP 1 obligation deadlines in September.

Ninety-nine percent of you met the 18 month deadline Congress set. I know it wasn't easy -- and I know Mercedes and her team at CPD were proud to help you get over the finish line.

Indeed, we all know that the Neighborhood Stabilization Program has been an essential tool in our cities' toolbox, helping you buy up foreclosed and abandoned homes.

That's why we've provided additional funding through the Recovery Act and through the Dodd-Frank Wall Street Reform bill for two additional rounds of NSP to meet an increased need.

But we also know the extraordinary challenges communities faced using these funds at the outset -- from staff shortages during a time of enormous budget cutbacks to having to establish individual relationships with financial institutions, to having to negotiate the best price one house at a time.

That's why we've made the program easier to use at the local level and unveiled a First Look partnership giving NSP grantees an exclusive 12-to-14 day window to evaluate and bid on properties before others can do so -- maximizing the impact of NSP dollars in our hardest-hit neighborhoods, making it more likely the properties communities want to buy are strategically chosen and cutting the time it takes to re-sell foreclosed properties in half.

All told, we expect NSP will impact 100,000 properties in the nation's hardest-hit markets -- which makes up 20 percent of the REO in NSP-targeted areas.

Last year alone, our partner, the National Community Stabilization Trust, gave communities an exclusive window to purchase 70,000 REO properties -- helping 188 communities access REO properties and save over $26 million in taxpayer funds, an average discount of nearly 13 percent per property.

With NSP 2 projects continuing to get underway, NSP 3 dollars hitting the ground in March and additional clarity surrounding our housing market in the coming months, we expect a big bump in strategic REO acquisition in 2011.

An Uncertain Budget Situation

Of course, at the same time these tools are helping to repair our economy, we face an uncertain budget situation for the foreseeable future.

I mentioned earlier that our mayors have done a remarkable job making sure that Recovery dollars aren't left on the table -- that they're creating jobs, homes and opportunities in your communities.

In fact, over 300 of your members have already drawn down every dollar of CDBG funds received through the Recovery Act -- and dozens more are right behind them.

Having led a city agency myself, I know how critical programs like CDBG and HOME are to your communities -- and know you passed resolutions at your June conference supporting these important programs.

This May will be the 20th anniversary of the HOME program -- and this year, it will produce its one-millionth home.

The cities where Mercedes Marquez, our Assistant Secretary for Community Planning and Development and I ran the housing agencies prior to coming to HUD--Los Angeles and New York City--are two of the country's biggest three beneficiaries of CDBG.

And so, we've seen for ourselves the difference CDBG funds make and how the dollars they leverage build the economic infrastructure a community needs to thrive.

Still, while President Obama has not yet released his FY 2012 budget proposal, some are suggesting we cut $100 billion from domestic programs.

Now, let me be clear, this administration is serious about reining in unnecessary spending -- and you'll see that in the President's budget. Tough decisions will need to be made.

But we are also committed to making the strategic investments we need to ensure the economic future of this country.

And CDBG is an important catalyst for economic growth -- helping mayors around the country bring retail businesses to their communities, forge innovative partnerships around child care and rebuild their economies.

In fact, results from the Recovery Act show that CDBG creates twice as many jobs per dollar as other Recovery Act programs. That's real bang for the buck.

I saw the coverage of the press conference you held with congressional leaders yesterday on CDBG -- and this Administration is well aware how important this funding is to you.

So, let me be perfectly clear:

When it comes to CDBG funding, I hear you--and President Obama hears you--loud and clear.

And we need your help -- to keep reporting data we need--and improving the data you collect--to make the case that CDBG creates jobs.

Building Strong, Sustainable Communities

Of course, CDBG isn't the only area we need you to make your voices heard.

HUD programs provide safe, decent and affordable housing to 4.5 million people -- more than half of whom are elderly and disabled.

These are programs in which costs go up every year just to serve existing residents. So ensuring we continue to support those residents makes funding new initiatives that much harder.

That's why you and I have a big case to make on other innovative initiatives we have put in place to follow your lead -- and to support the work you are already doing to prepare your communities and economies for the future.

The first is sustainability and green jobs. I don't have to tell this audience how important this is to our economy. Green construction spending already supports more than 2 million jobs and generates more than $100 billion in GDP and wages. And over the next four years, it will support nearly 8 million jobs and generate more than a half trillion dollars in economic activity.

On Tuesday, I joined Mayors Tom Barrett of Milwaukee, Mike McGinn of Seattle, Jean Quan of Oakland, and Angel Taveras of Providence to promote Green Cities and Green Jobs during the White House-Emerald Cities conference. And what I heard was clear:

Sustainability isn't just about green roofs and energy-efficient buildings -- it's also about where those buildings are located with respect to transportation.

America must find a way to connect housing to jobs.

Today, for every dollar the average household earns, they now spend 52 cents on housing and transportation combined. They have become American families' two single biggest expenses.

This past October, I was proud to award $140 million in grants to support local and regional sustainable communities initiatives in over 100 communities.

Demand for our two new Sustainable Communities grant programs was phenomenal. Seventy-eight million Americans live in the 45 regions that won these competitions -- but still we were only able to fund a quarter of the applications we received.

For our Community Challenge grant program, which we administered jointly with the Department of Transportation, the funds awarded by HUD and DOT will leverage over $50 million in additional local, state and private funding.

These grants represent the most significant federal investment in planning in generations.

Planning our communities smarter 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. More kids in your communities will be healthy and fit. And more businesses will have access to the capital and talent they need to grow and prosper.

Indeed, regions who embrace sustainable communities will have a built-in competitive edge in attracting jobs and private investment.

Of course, the grants we provided weren't just about central cities. More than half of applicants came from small towns and rural regions -- and winners included rural counties in central Florida, Appalachian communities in western North Carolina and Native American tribes in Washington State and South Dakota.

This commitment to rural America extends beyond sustainability grants to our $25 million Rural Innovation Fund, which supports 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.

Because when it comes to strengthening communities--central cities or rural places--our mayors know better than anyone that one size doesn't fit all.

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

Remaking America's Public Housing

Another area where we must make our case is for transforming the way we provide rental assistance.

As I discussed over lunch with some of you in December, this is not only important for the transformation of affordable housing -- but also for the landscape of many of your cities.

In communities across the country, mayors have been pioneers working with the private sector to leverage public dollars to generate economic development. But when it comes to public housing, your hands are tied.

Despite an enormous need, antiquated rules developed nearly a half century ago prevent anyone but the Federal government from financing improvements to public housing.

These rules haven't just stood in the way of building housing. They have also stood in the way of building in the neighborhood around that housing -- the grocery stores, schools and retail businesses that are the bread and butter of our nation's construction industry, leaving whole neighborhoods segregated and isolated from opportunity.

Our Transforming Rental Assistance proposal would change that by providing more opportunities to create properties and homes with a mix of incomes and uses -- leveraging private and other public sector funds--including Low-Income Housing Tax Credits and the CDBG and HOME funds you control--and encouraging the kind of market discipline in public housing we've seen elsewhere in the affordable housing sector.

You all know this isn't a pipe dream because you've seen it. HOPE VI has begun this transformation -- in fact, Mayor Fox lives in a HOPE VI development.

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

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.

In fact, in the time I've been speaking, we've already lost another unit of public housing. The status quo isn't good enough.

Congressman Keith Ellison of Minnesota is preparing to re-introduce the Rental Housing Revitalization Act which would bring $25 billion in private capital off the sidelines and create more than 300,000 jobs in the communities and neighborhoods that need them most.

This should not be a partisan issue. Republican leaders like HUD Secretary Jack Kemp, who created HOPE VI, and Senator Kit Bond, who championed it for years, understood that instead of being the problem for your neighborhoods it's too often thought of as, public housing can be a real community asset.

And with the Rental Housing Revitalization Act, it will be.

A Focus On Results

Lastly, let me say that there is no greater opportunity for bipartisanship and for getting real results than the issue of homelessness.

When I was the housing commissioner in New York City, Mayor Bloomberg and I worked with Republican governor, George Pataki, to enter into NY/NY III -- a billion dollar investment to create 9,000 new units of supportive housing for the homelessness.

Given his background in business, Mayor Bloomberg was motivated by data proving that supportive housing successfully kept people off the streets. Governor Pataki was attracted to the long-term savings -- to the fact that that the real cost to the taxpayer wasn't the cost of housing the homeless, but rather the revolving door of emergency rooms, shelters, and jails that resulted if we didn't.

The Bush Administration realized that as well. Thanks to its leadership, that of key Members of Congress like Senator Jack Reed and Congresswoman Judy Biggert and countless local leaders, in the last few years the supportive housing model has helped communities around the country reduce chronic homelessness--the people on our streets we thought would always be homeless--by a third.

In fact, that very progress opened the door to a federal plan President Obama announced last year that will finish the job of ending homelessness.

The culmination of a decade of bipartisan progress on the issue, the plan, called Opening Doors, sets us on a path to end all homelessness -- committing our country to ending homelessness for families, youth, and children within a decade, ending chronic homelessness and homelessness among veterans in five years.

Let's be clear: this fight wasn't started in Washington.

It was started by you and your partners in communities around the country. You were the ones who said we could end homelessness in this country -- and have set out to prove it.

Well, with this plan, we are not only going to take on this fight -- with the Federal government supporting your work, we are going to win it.

Next Wednesday, I will be joining thousands of volunteers in nearly 4,000 cities and counties to conduct a national one-night count of homeless persons and families.

This "point in time" count is essential to having the clearest understanding possible of the scope and breadth of homelessness and to measuring our progress toward ending it -- and your residents can find out more about how to volunteer at www.hud.gov/homelesscount.

We are urging every community to participate, because good data is essential to measuring what works, what doesn't, and what we need to do better.

And here again, in today's tight budget environment, good data will be essential to making the responsible fiscal choices that reduce the budget deficit.

Some wonder whether we can make progress in a country this divided.

But whether the issue is tax cuts and programs like CDBG that create jobs, putting people to work rebuilding our public housing, proven strategies that prevent and end homelessness, or new tools that help communities that share problems finally start to share solutions, I'm confident we can not only make progress -- but history.

Ensuring we do starts with the men and women on the front lines of our communities.

It starts with the leaders here today in this room. It starts with you.

Thank you for this opportunity. Thank you for everything you do.

And I look forward to continuing our work together in the weeks and months to come.

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