Prepared Remarks of Secretary Shaun Donovan at the National Association of Counties 2011 Legislative Conference

Washington, DC
Tuesday, March 8, 2011

Thank you, Valerie, for that kind introduction, and for your service our nation's counties as President of NACO. Let me also thank your successor, Glen Whitley for his leadership as well.

It's great to speak to an organization that in so many ways is on the front lines. We've needed you like never before these last few years -- as you've witnessed the devastation of the economic crisis firsthand...and pushed back against it, using new tools and by forging new, innovative partnerships.

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

Winning the Future by Building Economic Competitiveness

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 closely with you to turn our economy around. Through the Recovery Act alone, we've renovated and developed over 410,000 homes -- and reached over 850,000 men, women and children who were either homeless or at risk of becoming homeless.

Foreclosures are down nearly 30 percent from a year ago. 

And I want to say a word of thanks to NACO for your resolution in support of our foreclosure prevention and mitigation programs -- which are in danger of being eliminated by the House majority. 

Because of these important efforts, we have been able to help more than 4.2 million homeowners facing foreclosure stay in their homes.

I know many of you have first-hand experience using Neighborhood Stabilization funds. And we have found that the $7 billion we've provided communities around the country to buy up foreclosed and abandoned homes have reduced vacancy rates in neighborhoods where these funds have been invested by as much as 50 or 75 percent. 

And while we continue working to improve these efforts to serve as many families as possible, we need your voices to ensure that we don't roll back these important gains -- and I urge to you contact your representative in Congress.

Remind them that because of these kinds of tools, an economy that was shrinking when we took office is growing again today -- and instead of rapid job loss, more than a million private sector jobs were created last year. 

Our unemployment rate has fallen to its lowest rate in nearly two years, with 222,000 private sector jobs created in February alone.

That's progress. 

It wouldn't have been possible with your partnership -- and this Administration is not going to let anyone turn back the clock on that progress.

That can't be allowed to happen.

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.

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 so we don't build our future on a mountain of debt.

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 be cutting.  

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

I saw for myself as a local housing official the difference these funds can make -- supporting senior housing, Boys and Girls Clubs, YMCAs, and other providers of critical community services.

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

Indeed, in this budget we made the choice to protect existing residents and reduce funding for new units and projects -- not only CDBG, but also HOME Investment Partnerships and the new construction components of the Supportive Housing Programs for the Elderly and Disabled--Section 202 and 811--all between 5 and 10 percent.

This budget also requires public housing authorities with excess reserves to contribute $1 billion so that we can fully fund the Public Housing Operating Fund. 

These resources were set aside so that our PHAs could continue operating during a rainy day -- and I think we would all agree that rainy day is here.

Winning the Future by Protecting Vital Investments

I know these cuts come at a difficult time. County governments across the country are facing unprecedented budget shortfalls that make even small cuts difficult -- which is precisely why we haven't cut our budget even deeper. 

As President Obama has said, 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, for a family receiving rental assistance from HUD, it's only $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 -- which took place between 2007 and 2009. 

These families are already among the folks hardest hit by the recession. They need to be protected -- and with the President's budget, they will be.

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 over 5.5 million families--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.

Winning the Future by Out-Educating the Rest of the World

With the remainder of my time today, I want to discuss with you how HUD's budget continues critical initiatives that have been part of our budget these last two years to help America out-educate, out-innovate and out-build our competitors around the world.

Now, the President has made clear that winning the future depends on America winning the race to educate our children. But that's not possible if we are leaving a whole generation of children behind in our poorest neighborhoods. 

That's why we have again proposed $250 million for our Choice Neighborhoods initiative. This funding will allow communities to use the mixed-use and mixed-finance tools pioneered by the HOPE VI program to transform not just public housing in a distressed neighborhood -- but all the federally-assisted housing in that neighborhood, while supporting those neighborhoods as they build the safe streets, good jobs, and quality schools every family deserves. 

And it's time we use those same kinds of tools to protect and preserve affordable housing for the future. 

Right now, we are losing 10,000 units from our public housing stock every year -- and by the time I finish speaking to all of you, we will have lost another.

Given all we know about the connection between safe, affordable housing and the start our children get in life, that's a tragedy. 

And what makes it even more tragic is that there's billions of dollars of private capital sitting on the sidelines that could put tens of thousands of construction workers to work rebuilding this housing -- but can't because of antiquated rules that prevent anyone but the Federal government from investing in these properties. 

That is why we have proposed a $200 million demonstration in our budget to preserve up to 255,000 public housing units using long-term project-based rental assistance contracts that keep these homes affordable not just for 5, 10 or 20 years -- but forever. 

With the need greater than ever--with all the effort and investment we've put into these communities--we can't just stand by and let these properties be demolished or sold off.

And I'm not going to let that happen.

Winning the Future by Out-Innovating the Rest of the World

Indeed, part of winning the future means building a 21st century government that responds intelligently to the needs of communities -- whether it's preserving affordable housing or connecting those homes to jobs and opportunity.

American businesses, large and small, cannot out-innovate their competitors when their workers spend 52 cents of every dollar they earn on housing and transportation combined and moving products on our roads costs five times as much wasted fuel and time as it did 25 years ago.

That is why we request another $150 million for our Sustainable Communities Initiative, which helps regions and communities develop comprehensive housing and transportation plans that create jobs and economic growth. 

In a community like Austin, Texas, you can see how the $170 million in grants we provided with the Department of Transportation last year weren't about one-size-fits-all rules that tell communities what to do -- but saving the taxpayer money by coordinating investments more effectively and efficiently. 

With a $3.7 million grant from HUD as the catalyst, Austin is linking its long-term regional transportation plan to 37 mixed-income communities near transit and job centers.

They're tying new workforce housing to a planned trucking and rail transportation hub near the airport that will employ 2,000 people. They're helping 3,000 family-run, small businesses expand by making that expansion contingent on hiring people put out of work by the recession.

Austin estimates that HUD's grant will help create at least 7,000 permanent jobs and thousands more in the construction sector, generating an additional $1.1 billion of economic growth over the next five years and saving the taxpayer $1.25 billion. 

The demand for these kinds of innovations explains the extraordinary demand for our grant program -- and it wasn't just coming from our largest metro areas. 

Over half of our regional grants were awarded to regions with populations less than 500,000 and rural places with fewer than 200,000 people -- and winners included rural counties in central Florida, Appalachian communities in western North Carolina and Native American tribes in Washington State and South Dakota. 

Our budget also requests $25 million for the Rural Innovation Fund to help tackle housing and poverty challenges in rural communities -- building on and scaling up the Rural Housing and Economic Development program, which has created nearly 12,000 jobs and provided job training to nearly 30,000 people, and increasing its maximum award to $2 million.

With these tools, parents will spend less time driving and more time with their children.

More families will live near good schools and jobs. 

More kids 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 of America's counties."

But cities, towns, and 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 approach communities are going to need to succeed in the 21st century. 

And with these grants, we're going to help you do it.

Winning the Future by Reforming Government

Lastly, 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. It complements targeted homeless vouchers with services provided by the Departments of Health and Human Services and the VA. And it requests 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 doing more of what works and to stop doing what doesn't work.

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.   

That is why the budget includes a "Growth Zones" multi-agency initiative with the Department of Commerce's Economic Development Administration to help communities use federal funds more effectively to support job creation. 

An improved successor to the Empowerment Zones, this effort couples targeted tax benefits and grant funding to promote high-impact strategies, and build the local capacity needed to execute those strategies and attract private investment. 

Of course, many of the communities I've visited were struggling long before our economy was on the brink of collapse. 

That is why this budget would also establish a National Resource Bank -- an interagency and non-government team that will be rolled out this spring as part of a larger initiative to target expert technical assistance to the most challenged communities so we can 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 more 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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