Prepared Remarks of Secretary Shaun Donovan to the National Association of
Development Organizations

Crystal Gateway Marriott, Arlington
Tuesday, March 20, 2012

Thank you, Russ -- for that very kind introduction and for your leadership, both with NADO and the Six County Association of Governments. And I want to thank you for your support during this budget process. Thanks also to your Executive Director, Matt Chase, as well as Earl Gohl and everyone with the Appalachian Regional Commission.

It's a pleasure to be here with so many representatives from regional planning and development organizations and councils of local government.

We meet at an encouraging moment -- when our economy is growing, jobs are being created and foreclosures are down. But with more work to be done to create an economy built to last.

Think about how far we have come -- when President Obama took office, we were losing 753,000 jobs per month.

Home prices had declined for 30 straight months.

And foreclosures were surging month after month.

Today, foreclosure notices are half what they were at the beginning of the Administration.

More than 5.7 million families have received mortgage modifications that have helped them stay in their homes.

And, most important of all, we've added private sector jobs for two straight years, for a total of over 3.9 million jobs.

In the last year, 2.2 million private sector jobs were added -- and we've added more jobs in the last 6 months than any six-month period in nearly 6 years.

That is the kind of progress President Obama's recently proposed Fiscal Year 2013 budget capitalizes on -- making the kind of investments in education and skills for American workers, in innovation and research and development, and in clean energy and infrastructure we need to create an economy built to last.

I'm proud HUD's proposed budget does its part to meet the President's charge -- bringing private capital back to the housing market, keeping vulnerable families in their homes, continuing progress on our economic recovery, reforming government.

And nowhere is that charge clearer than our investments in community and economic development -- in the funding for the Community Development Block Grant and the HOME Investment Partnerships and the $100 million of funding the budget would restore for our Sustainable Communities Grants.

Collectively, these investments help each of you strengthen neighborhoods in your communities and connect those neighborhoods to the vibrant regional economies America needs to compete.

But, as you know, this is a difficult budget environment -- and we have had to make tough choices. Choices we wouldn't make in a different fiscal environment.

In last year's budget agreement, we were forced to accept less funding for CDBG and HOME, despite great need at the local level -- and funding for our Sustainable Communities Grants was eliminated entirely.

This year, some have asked why not just simply combine Sustainable Communities funding with CDBG.

Well first, let's be clear, with Sustainable Communities grants representing one-thirtieth of the CDBG budget, doing this would have little effect on CDBG overall funding levels.

And with virtually everyone here today a CDBG grantee--and about half of our Sustainable Communities grantees right here in this room--I know this audience understands we can't pit one kind of funding against the other.

To create an economy built to last, we need both -- and we understand how small catalytic investments like Sustainable Communities help leverage and extend larger formula investments like CDBG and HOME.

So, today, I want to talk about how the distinct tools these programs provide work together to knock down barriers to economic growth -- and encourage private sector participation and job creation.

I want to talk about how they forge stronger, more effective collaboration at the regional level and how they make us at the federal level a better partner to you at the local level.

And above all, I want to talk about how in an environment in which every dollar is precious, why investing in community development and planning will help stretch those dollars further than ever before.

Creating Jobs at the Local Level

Better than just about anyone, this audience knows how important CDBG is to economic development and creating jobs at the local level.

From funding the construction of public facilities and housing rehab, to acquisition and public services, to more costly repairs like water and sewer infrastructure, dollar for dollar, CDBG is the most effective job creator in our budget.

In fact, results from the Recovery Act show that CDBG created twice as many jobs per dollar as other Recovery Act programs.

Indeed, for every dollar CDBG invests in our communities, it leverages another $3.55 in private and other public dollars -- and efforts like the Section 108 loan guarantee program allow grantees to borrow five times their annual CDBG allocation.

That's serious bang for the buck.

CDBG not only creates jobs in the hard hit construction sector. By helping communities forge innovative partnerships around child care, it also provides the basic conditions communities need to attract businesses and grow and nurture their workforces for the 21st century.

And Sustainable Communities grants help these dollars go further.

Where CDBG funding can be used to partner with the private sector, public, nonprofit and private sector consortia actually apply for and receive Sustainable Communities grants directly -- ensuring that local businesses and Chambers of Commerce who participate in CDBG projects can be full partners in planning for the future.

These grants put everyone at the table together -- designing investments and interventions and making decisions together.

That means helping communities and regions create jobs not simply from one project to the next with one federal investment -- but planning for their future economic competitiveness and leveraging all federal investments strategically.

In few places is this dynamic as clear as in Memphis, Tennessee.

There, a Sustainable Communities Challenge Grant has helped the city revitalize neighborhoods surrounding its international airport--the so-called "Aerotropolis"-- neighborhoods with high foreclosure, widespread vacancy and abandonment, and social and economic problems that were decades in the making.

The integrated housing, transportation, economic and workforce development strategy that has resulted--supported by critical Section 108 funding that is leveraging dollars for everything from multi-family housing to commercial space to public parking--has not only helped FedEx create over 3,000 jobs in the city.

Just as importantly, it is why Memphis is poised to create another 1,500 by attracting companies like Electrolux, Mitsubishi, and Nucor Steel, with other companies like Williams Sonoma beginning to follow suit.

In the words of the local Chamber of Commerce, "We wouldn't have been able to make progress on our Aerotropolis strategy but for the Sustainable Communities investment" -- because they understand how it leverages critical investments like CDBG.

Having applicants that go beyond the public sector at the table not only ensures more direct involvement from private business -- it also ensures that communities can look comprehensively at unique market assets, strengths and weaknesses in employment sectors, and the types of infrastructure and housing they need to support resilience for the years to come.

This is particularly important at a time when cuts to CDBG has meant less funding is available for planning.

For instance, as I saw for myself on a visit to North Dakota, over the past few years, the boom in shale oil production there has brought a thousand new good paying jobs to this rural state. That's great for the North Dakota economy but it's causing an acute housing shortage with workers sleeping in their trucks or bunking together in so-called "man camps."

And the jobs pay so well, it puts workers there above the allowed income limits for plans and projects sponsored by CDBG.

And so, our Sustainable Communities regional planning grant is helping North Dakota attract market rate developers to the region, drawing in a broader range of housing and amenities than CDBG could alone -- enticing homebuilders to the area, and building neighborhoods where new homes are energy efficient and families can walk and bike to schools and other services.

Regional Collaboration

As North Dakota reminds us, where local CDBG funds have to be administered through the state for many small and rural places, Sustainable Communities grants ensure community development planning is happening at the regional scale as well.

And indeed, the partners that are growing more important with each passing day are regional ones -- the residents in adjacent neighborhoods, the nearby city just across the state line, and the interlinked network of counties with whom you all share an economic future.

Now, many of you are already thinking regionally -- because you know you aren't just competing against your neighbors, but also competitors from across the country and the globe.

China, Russia, Indian and Brazil don't distinguish between Detroit and Troy or any other metropolitan area.

They see a single region, a single economy, a single competitor.

They know that our metropolitan areas are where 85 percent of jobs are located and more than 8-in-10 residents live.

They know that it's our metros that produce over 80 percent of the nation's patents and exports, and where 90 cents out of every dollar America produces come from.

And so do American businesses, which are looking to locate in places that have a regional economic vision for the future and strong neighborhoods where their employees can live and raise their families.

And our international competitors know something else:

That when communities in a region here are fighting amongst themselves about regulatory structures, from taxes to land use, they win and we lose.

Indeed, when it comes to the way communities manage transportation, building and land use, too often every community in a region has a different set of rules and codes -- especially those which rely on integrated supply chains that cross interstate borders.

That is why the competitive dollars Sustainable Communities grants provide are such a powerful incentive for local governments and counties that want to take a regional approach -- but don't always have the coordination they need.

By ensuring communities can work together to harmonize their zoning, land use, tax and transportation and housing plans in a way that responds to their unique needs, Sustainable Communities grants help communities that share problems share solutions.

In the Kansas City region, we see this clearly. Like so many across the country, its suburban communities, are facing twin sets of challenges.

On one hand, they are attracting office developments that are looking to move away from downtown and to suburban sites with good freeway access. At the same time, these places often have miles and miles of arterial streets lined with strip commercial development that, quite frankly, is no longer economically viable.

In the past, that tension between city and suburb has resulted in a race to the bottom.

In commercial areas no longer providing a tax base for communities.

People spending long hours stuck in traffic driving to work.

And businesses faced with the difficult choice of leaving the region entirely.

But spurred by two Sustainable Communities grants, Kansas City's Mid-America Regional Council is using those competitive dollars to begin a race to the top.

Using the regional Sustainability Grant it received two years ago that helped align the region's land use and transportation investment plans, the region is providing funds to multiple jurisdictions to help them work together and putting millions of CDBG and other dollars to work strategically.

And it's not just CDBG these grants leverage. Using the commitments expressed in its Creating Sustainable Places plan, the Kansas City region has secured federal investment from six different federal agencies, including HUD, making the case that aligned public sector resources will increase the economic competitiveness of the region.

Or in Washington County, Oregon, which used a Sustainable Communities Challenge Grant to develop an affordable housing strategy for the region. Now, the County is using HOME funds to actually build that affordable housing, in proximity to light rail and amenities like grocery stores, coffee shops and restaurants.

Nor, as North Dakota reminds us, do all these partnerships involve large cities. Some folks here in this audience know that in Ranson, West Virginia--population 4,000--economic decline has devastated more than a third of jobs in the local economy over the last decade.

Ranson is using a HUD sustainability grant to partner with neighboring Charles Town--population 4,300--to reverse that decline and create its own vision for a sustainable economic future.

In fact, with DOT TIGER II grants and funding from EPA to recycle contaminated Brownfield sites, the community is already in the process of creating a high-tech commerce corridor that includes housing, office space and community parks -- and using that investment to apply for a Section 108 grant to bring additional commercial development to the community.

Better Federal Partnership

Ranson reminds us that too often, a barrier to growth is a lack of shared visions and investments -- not just locally, regionally or across state lines, but also at the federal level.

In communities across the country, we've seen how HUD investments like CDBG and HOME can be the anchors for other types of federal investments.

But all too often, that meant a housing development or community center in one place -- and a bus line somewhere else.

Now, the local planner in me has always found that kind of thing just incredibly frustrating.

But in these days of limited fiscal resources and high gas prices the lack of federal coordination is more than frustrating.

It's unacceptable -- and it's unaffordable, both for the taxpayer and for families who are now spending 52 cents of every dollar they earn on transportation and housing.

That's why the Partnership for Sustainable Communities between HUD, DOT and EPA has been so important -- particularly its ability to bring other federal partners to the table.

Just look at the East Liberty neighborhood in Pittsburgh, where the expansion of Google has helped transform an old Nabisco plant along Penn Avenue into a mixed-use office and retail cornerstone.

When Google decided to expand, they didn't just throw a dart at a map. They saw East Liberty's proximity to the City's universities and talent.

But Google also knew something else:

That the neighborhood had been the focus of public reinvestment -- from the introduction of rapid transit, to the transformation of one of the nation's most troubled public housing developments.

Indeed, millions of CDBG, Section 108 and HOME dollars had been central to the clean up of the neighborhood from years of industrial use.

And with a joint sustainability grant from HUD and DOT, they saw a community focused on improving housing and small business opportunities in the surrounding area.

As a result, Google is expanding from around 45,000 square feet to more than 100,000 square feet, taking up nearly all of the remaining office space in Larimer Bakery Square. And about half of Google employees in the $130 million project are graduates of local schools.

Now, you might think that, from the way I've described them, CDBG provides the dollars and the Sustainability Grants provide the strategy and planning to get the most out of them.

In some cases that may be true.

But the strategy and planning is also supposed to be the purpose of the Consolidated Plan we require CDBG grantees to complete.

Unfortunately right now, the Con Plan is mostly a cumbersome budget document that tells us what grantees spend their money on -- not what the real purpose of that investment is.

Part of that is because, while CDBG allows 20 percent for admin and planning, as funding shrinks, so, too, does the size communities allocate for planning.

That's why I'm so excited HUD's Assistant Secretary for Community Planning and Development Mercedes Marquez has totally overhauled our Con Plan to ensure it includes other resources communities are using to meet their larger economic development goals.

For instance, the new Con Plan uses a mapping tool and planning template that helps you assess needs in the context of other HUD investments. That means when you are planning how to use your CDBG funds, everything from public housing data, HOME investments and vouchers, to economic development data provided by the Census, to transit locations from DOT will be on your computer screen in a map so you can see all of it for yourself.

Not only that, the entire plan will be web-based. No more filling out pages of data.

We expect it to go live in May -- and we think it's another way you will be able to stretch not only CDBG dollars further, but just as importantly, any other dollar that they touch, be they federal, state or local, public or private.

An Economy Built to Last

With these efforts, we believe communities will have the tools they need to be smarter, more effective and more strategic about how they use federal dollars to attract private dollars than ever before.

Like the President has said about energy policy, we need an "all in" strategy -- one in which everything is on the table and everyone is at the table.

The kinds of strategic partnerships I've described aren't about someone in Washington telling you what to do.

They're about having a partner in Washington that's actually asking, "What can we do to help?" -- and actually providing you with that help when you tell us.

They're about having a partner that can help you bring all the stakeholders you need to the table to realize your vision for economic growth -- from business leaders, to community leaders, to local elected leaders.

They're about creating an economy built to last -- built not just by Washington but by the citizens and businesses of your communities, with all voices and all investments working together for a resilient prosperous economy that produces opportunity not for some but for all.

And so, we need you to do your part -- to tell your story and remind your Members of Congress how these grants work together to support your region.

To tell them that these efforts aren't about government that's big or small.

They're about government that's smart.

That's what this is about -- and it's why I've been so proud to partner with so many of you on it.

So, thank you -- for this opportunity and for everything you do to make your communities and your regions strong.


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