Prepared Remarks of Secretary Shaun Donovan at the National Association of Regional Councils' National Conference of Regions

Ritz Carlton, Washington, DC
Tuesday, February 15, 2011

Thank you, Steve, for that kind introduction -- and congratulations for your recent election to Connecticut's state Senate. 

I want to thank you and your successor, Ron Morrison, for your outstanding leadership -- and for bringing the solutions you forged at the local and regional levels in Manchester and National City to the NARC and to communities across the country. I know that between Ron and Fred Abousleman, the future of the NARC is in good hands.

And it's important that you are, because the health of the communities that this organization represents is essential to the growth of our economy and the future of this country.

Indeed, in so many ways, you are on the front lines -- having both witnessed the devastation of the economic crisis firsthand...and pushed back on it using new tools and by forging new partnerships.

That's why I'm so pleased to appear before you to discuss how the Administration is not just building on that recovery through HUD's proposed 2012 budget -- but also how, under President Obama's leadership, we're committed to winning the future by working with partners like the NARC to support innovation, build strong, sustainable, inclusive neighborhoods that are connected to education and jobs, and provide access to opportunity for all Americans.

Of course, we won't win that future by building it on a mountain of debt. 

That's why HUD's budget also reflects the tough choices President Obama has asked all of us to make, as we work to put the country on a fiscally responsible path.

Winning the Future by Building Economic Competitiveness

So, first, let me put this budget into a bit of context.

I don't need to tell all of you the state of the economy two years ago -- you bore the brunt of the crisis. You know that credit had frozen solid, that our economy was falling off a cliff -- contracting at an alarming rate. The housing market seemed to have no bottom. 

Home prices had fallen for 30 straight months -- and jobs were declining for 22 straight months. 

But thanks to the work that you did with the tools we provided, we're able to submit HUD's 2012 budget in an economic environment that is significantly improved from when President Obama took office.

At HUD, we've worked hard to turn our economy around. Through the Recovery Act alone, we've worked with you to renovate and develop over 360,000 homes -- and reach over 850,000 men, women and children who were either homeless or at risk of becoming homeless.

Foreclosures are 30-to-40 percent down from they were a year ago. Indeed, thanks to the standard we've set for mortgage modifications and the robust refinancing market that's emerged as a result of low interest rates, we've helped 4.1 million homeowners facing foreclosure stay in their homes.

As a result of efforts across the Administration to work with our communities, an economy that was shrinking is growing again -- and instead of rapid job loss, more than a million private sector jobs were created last year.

Still, we know there's more work to be done to ensure that America and its workers can compete and win in the 21st century -- and I'm proud to say HUD's budget tackles these challenges head on.

To push back against the foreclosure crisis, we're helping responsible families at risk of losing their homes and meeting the need for quality affordable rental housing.

By transforming neighborhoods of poverty and rebuilding our federally-assisted public housing stock, we're ensuring that these families are part of the mobile, skilled workforce our new global economy requires -- and that children who live in these neighborhoods have access to the quality education they need to be a part of it.

And by leveraging private sector investments in communities, as so many of you have, we're creating jobs and generating the economic growth we need to out-innovate, out-educate and out-build the rest of the world.

Winning the Future by Taking Responsibility for Our Deficit

But before I go in to the investments this budget makes, let me say a few words about how we are taking responsibility for our deficit.

The President has proposed a freeze on domestic spending for the next five years, cutting the deficit by $400 billion over 10 years and bringing non-security discretionary spending to the lowest share of the economy since President Eisenhower. 

Every department shares a responsibility to make tough cuts so there's room for investments to speed economic growth.

And HUD is no exception.

In a tight budgetary climate, we've had to make some difficult choices, including reductions to programs that, absent the fiscal situation, we would not cut.  

For example, the reduction to CDBG, which at 7.5 percent, is far less drastic than I think many anticipated.

But American families are tightening their belts -- and we need to do the same.

To maintain this commitment to fiscal discipline, we have protected existing residents and made the difficult choice to reduce funding for new units and projects, including cuts to the new construction components of the Supportive Housing Programs for the Elderly and Disabled--Section 202 and 811--HOME Investment Partnerships, and Community Development Block Grant.

Winning the Future by Protecting Vital Investments

Despite this commitment to investing in what makes America stronger and cutting what doesn't, some will ask why we haven't cut our budget even deeper. 

Now, to be clear: I respect those voices. But I also agree with President Obama that we cannot cut our budget on the backs of our most vulnerable citizens. 

And let's be clear: that is exactly what we would be doing if we cut even further. 

The majority of HUD's budget is required each year simply to hold the line -- to keep current families in their homes and provide basic upkeep to the public housing stock.

In fact, 80 percent of our budget is used for renewing homeless and rental assistance, and providing capital needs funding for HUD's public housing stock. 

We made that choice for a simple reason:

Extremely low income families make up 72 percent of HUD-assisted households -- and more than half are elderly or disabled.

To give you an idea, while the median family income last year was over $60,000, the average adjusted income of a family receiving rental assistance was $10,200.

At the same time, over 7 million very low income renters pay more than half of their income in rent. Over 650,000 people were homeless on a single night in January 2010. And we just reported the largest increase in worst case housing needs in the quarter-century history of the survey. 

These families are already among the folks hardest hit by the recession. They need to be protected -- and with the President's budget, we have made a commitment to protecting them.

Toward that end, HUD's budget serves almost 2.5 million families living in public housing and project-based Section 8 developments--nearly two-thirds of whom are elderly--and disabled and provides tenant-based vouchers for over 2.2 million families -- nearly half of whom are elderly and disabled.

In all, the 2012 budget assists nearly 5.5 million households--86,000 more than at the end of last year--and doubles the number of new supporting housing units to meet rising demand -- even in this tight budget environment in which we've had to make tough choices.

We are also keeping our promise to resume funding new construction for the Section 202 and 811 programs once Congress reformed those programs--which they have--and by fully funding the public housing capital and operating funds -- which we accomplished by proposing to recapture $1 billion in operating reserves from public housing authorities. 

And the budget includes a $200 million demonstration based on HUD's Transforming Rental Assistance initiative for 250,000 public housing units to convert to long-term project-based rental assistance contracts, which PHAs can use to leverage private capital. 

Collectively, these investments not only support vulnerable families -- just as importantly, they support our economic recovery, creating or retaining 650,000 jobs directly and indirectly.

Winning the Future by Outbuilding the Rest of the World

The President's focus in his FY 2012 budget on repairing our existing infrastructure and building new ways to move people, goods and information will not only put people to work now -- it will also spur investments that build a stronger economy. 

At HUD, we see these challenges very clearly. Today, for every dollar the average household earns, they now spend 52 cents on housing and transportation combined -- as they grapple with congestion, unstable energy costs and a host of other factors. They have become our two biggest household expenses.   

Part of the solution for improving our economy, for reducing our dependence on oil and household expenses alike is encouraging more sustainable communities.

Communities with more housing and transportation choices, located closer to jobs, shops and schools, will attract more private investment and talent and be the most globally competitive -- it's that simple.

That's why, last fall, HUD and the Department of Transportation 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. 

Demand for our two new Sustainable Communities grant programs was phenomenal. And it didn't just come from 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. 

In all, 78 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.

Our proposed FY12 budget helps meet the demand by requesting, even in these difficult times, $150 million for additional Sustainable Communities grants.

These funds will create incentives for communities to develop comprehensive housing and transportation plans that spur jobs and reduce the combined cost of housing and transportation -- funded not by the Federal government, but by private investment. 

Indeed, for our Community Challenge grant program, the $70 million in funds we awarded with DOT last fall will leverage over $50 million in additional local, state and private funding.

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 in your communities will have access to the capital and talent they need to grow and prosper. 

I know I'm preaching to the choir here -- "the voice for regionalism."

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

Not only that, but by helping them use existing financial resources more strategically, these communities will be able to solve three or four problems with a single investment.

That is the new fiscal responsibility President Obama proposes in this budget -- and it's the kind of responsible approach communities are going to need to succeed in the 21st century.

Winning the Future by Reforming Government for the 21st Century

As these investments remind us, we need to reform government so that it's leaner, smarter, more transparent, and ready for the 21st century. 

And as President Obama said in his State of the Union, removing overlapping and contradictory rules and regulations is essential to generating economic growth. 

And we need to move past the old debate of big government versus small government. An effective HUD is about smarter government.

That's why we continue to make it our focus to improve and simplify the way HUD works with other agencies -- and with communities at the local and regional level. 

Take homelessness as an example. Over the last decade, we've seen that when localities approach the homelessness problem by combining housing with supportive services, the results are fewer ambulance and police calls, fewer visits to the emergency room, and--just as importantly--real savings for taxpayers.

It was those results that paved the way toward Opening Doors -- the first federal strategic plan to end homelessness. 

To help realize its goals, our budget more than doubles the annual rate at which HUD assistance creates new permanent supportive housing for the homeless.

And it's why we provide funding for vouchers targeted to the chronically homeless, homeless families and veterans -- which will be complemented by services provided by the Departments of Health and Human Services and the VA. 

Indeed, because of the progress we've seen, we've asked for another 10,000 vouchers for the innovative HUD-VASH partnership to end veterans' homelessness.

Of course, making smart, responsible choices depends on more than partnership -- it also requires quality information and cutting edge technical assistance.

That is why this budget demonstrates a strong commitment, through our Transformation Initiative, to conducting the research and collecting the data we need to understand what works, what doesn't, and what we need to do better.

And it also continues a new way of doing business. Over the last two years, I've been traveling the country, meeting with all of you. And what I've heard is that you don't want a HUD that's only about regulations and oversight

You want a partner who provides innovative, cross-cutting technical assistance -- tools that go beyond program compliance to help you build capacity, improve performance and respond to local needs with local tools.   

Over the last two years, I've traveled to communities that have not only struggled during this economic crisis -- but were struggling long before our economy was on the brink of collapse. 

And so, this budget would also establish a National Resource Bank -- an interagency and non-government team that will be rolled out this spring. The idea behind the bank is simple: to bring expert technical assistance to the most challenged communities -- that can be deployed in a targeted way to address complex problems, from regional planning to blight reduction to attracting private investment. 

This effort builds on our OneCPD initiative -- which is transforming all the technical assistance we used to do in a disconnected way, program by program, and connecting it through a single, integrated NOFA process. 

As a former HUD customer myself, I know how challenging it is to align the various "buckets" of Technical Assistance HUD provides to the challenges your communities face. You've asked for us to simplify this process -- and with this budget, we will continue to.

Winning the Future Starts at Home

With each of these efforts, the goal is the same: to better serve the American people, to better protect the American taxpayer and to better partner with your communities so that we can meet the challenges ahead.

Ultimately, one of the great challenges of my tenure at HUD will be not only to help you emerge from this crisis -- but to help you emerge more resilient and competitive.

If we are going to meet the President's charge to win the future, my job is clear:

To be a better partner to you. 

That's what this budget is about -- and I know this isn't the end of the conversation, but really the beginning.

Whether the issue is putting people to work rebuilding our public housing, proven strategies that prevent and end homelessness, new tools that help communities that share problems finally start to share solutions, or taking responsibility for our deficits by doing more with less, I'm confident we can not only make progress with this budget -- 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. I look forward to continuing our work together in the weeks and months to come.


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