Remarks of Secretary Shaun Donovan and the NLC Congress of Cities Conference

Washington, D.C.
Monday, March 11, 2013

Thank you, Mayor Becker, for that kind introduction.  I want to thank you, Mayor Coleman and Mayor Rogers for your leadership and all that you do -- on behalf of your own cities and the NLC, which has again put on a great conference. 

It's a pleasure to be back with all of you -- it's inspiring to see so many committed partners in one room.

Your continued support and engagement are critical to so many of HUD's programs, and together helps us build a brighter future for our nation's cities.

Today, our country is in a very different position that it was, even a year ago.

There are many encouraging signs in our economy -- housing construction is growing faster than at any time since 2008, 2012 was the strongest year of home sales since the economic crisis began, and rising home values lifted 1.4 million families back above water. 

Mortgage interest rates remain low, foreclosure starts are down, and around the country unemployment continues to fall, putting families and communities on the road to recovery, in part, because of this administration's policies.

This improvement in the housing market and subsequent recovery of the economy is beginning to have a real impact, even in some of our hardest-hit cities.

We will obviously still face big challenges in the coming months -- and your partnership is going to be more important than ever.

That's why we need to find new ways to continue to collaborate and work together -- across programs, across agencies and across regions.

Today I'd like to talk about what we've been doing to strengthen the programs you rely on, the role that partnership and a regional economic competitiveness play in the success of our cities and towns, and the potential harm that sequestration can cause.

Because we have to reverse sequestration and put these misguided cuts behind us.

Programs and Partnership

This Administration understands that some of the biggest challenges you face are fiscal.  We are all going to have to continue to do more with less.

I know many of you are concerned about the future of the HOME program, a critical resource for many cities.

Having managed New York City's HOME program at the Department of Housing Preservation and Development, I know just how important those funds can be.

It is the largest federal block grant program dedicated to affordable housing production and it is essential to our affordable housing finance system.  In just over twenty years, 650 participating jurisdictions around the country have created over 1 million affordable units and provided rental assistance for an additional quarter million people. 

Moreover, every HOME dollar leverages more than $4 in other public and private sources, thanks in large part to your work to maximizing its effectiveness.

Unfortunately, HOME remains an easy target for those who fail to understand how vital this funding is to the production of affordable housing.  Indeed, even as we fought for it, funding has been cut in half since 2010. 

We will continue to push for these critical dollars, but we'll need your continued support to make the case that this program is necessary for affordable housing production in this country. But also to keep the economic recovery going, maintain construction job growth and help those in greatest need.

We have also worked with you to find ways to increase the efficacy of your HOME dollars while making the program more transparent and accountable.

Over the next month, we're going to release a number of rules that will improve grantee performance and accountability, strengthen capacity requirements for developers, implement new standards, and enhance oversight.

Like HOME funds, many cities also rely on Community Development Block Grants -- they have not only helped stabilize the housing market, but they allow you to invest in the future.

One of our most flexible tools, CDBG leverages $3.50 of private capital for every Federal dollar we invest.

You have proven that CDBG creates jobs, brings businesses to your cities, forges innovative partnerships around services, and helps rebuild your economies. 

CDBG remains a centerpiece of our community development efforts despite having lost 25 percent of its funding since 2010.

To ensure continued strong support for CDBG in the future, HUD is working with grantees to focus investments on the neighborhoods that have the greatest need for assistance.

We are introducing a new suite of planning tools that help better identify those needs, providing extensive technical assistance, and better leveraging CDBG, and other Federal, state and local resources to create comprehensive place-based strategies.

This year, we are going to be reaching out to you for more feedback on how to improve and preserve CDBG for the future.

CDBG is also a vital tool for rebuilding after a disaster -- one that is currently an essential piece of the Hurricane Sandy recovery efforts.

I'm proud to say that HUD announced the first round of allocations of the Community Development Block Grant Disaster Recovery funding a mere eight days after the President signed the supplemental legislation -- the fastest HUD has ever allocated funds following the signing of an appropriations bill.

The first round of funding included $5.4 billion for five states and focused on addressing the largest unmet needs -- primarily housing and small businesses.

In the coming weeks, we will also be announcing allocations for other communities affected by disasters in 2011 and 2012.

Last week we released the criteria that grantees must meet to access the funds -- meaning money could begin flowing in a matter of weeks.

The flexibility of this funding is crucial in another way -- we want affected communities to incorporate sustainability principles and best practices from throughout the federal government into the rebuilding process because we must address not only recent damage but challenges that are the result of long term neglect and disinvestment.

We've also learned that investing in mitigation efforts is the smart thing to do -- by preventing future damage we save $4 for every dollar we invest.

That's why programs like CDBG and HOME are so important -- they allow us to focus not just on what our communities look like right now or how they can be better in the next few years -- but our goals for the next few decades.

Growing Regionally

To achieve those goals, each of you are going to have to do more than just work with HUD and other Federal agencies or find new community partners.  You're going to have to partner with each other, across regions.

You've probably heard me say that China doesn't distinguish between Detroit and Troy, Michigan, or LA and Orange County, California -- they see a single region, a single economy, a single competitor.

And as local economies become more interdependent and regional we need to embrace that reality. 

The success of a region is tied not just to the success of individual cities within that region, but to how the region manages its resources and addresses challenges as a whole. 

A big part of what will allow our communities to succeed is collaboration on a shared economic future through coordination of transportation, building and land use planning efforts. 

The Partnership for Sustainable Communities helps us to coordinate our efforts across HUD, the Department of Transportation and the Environmental Protection Agency, combining our resources to make the largest possible impact and promoting conversation about what makes individual communities sustainable. 

Communities where the Partnership at work are recipients not just of a single grant, but a combination of Challenge, Choice Neighborhoods, TIGER, and Promise Neighborhood grants, and multi-agency technical assistance.

Our most productive partners are those that espouse a similar approach -- by focusing on ways to leverage private capital and create partnerships that bring additional resources to the table. 

Because the transformation of our neighborhoods and communities doesn't happen due to a federal grant alone. It happens when all of you, the stakeholders--who may never have worked with each other before--start coming together to build consensus about the future of a region.

It happens when these partners work to secure and target funding from different sources--and when they bring innovative, evidence-based solutions to complex problems.

This is also a great way to do more than less.

The plan the President outlined in his State of the Union Address builds on some of the progress we've made during the last four years. It strengthens the middle class by growing jobs and manufacturing, equipping every American with the skills they need to do those jobs, and ensures that hard work leads to a decent quality of life.

And it emphasizes the importance of a community to the families that live there.

As the President says, a child's zip code should never determine her destiny. But today, in too many of our challenged neighborhoods that's exactly what happens -- it negatively impacts everything from her odds of graduating high school, to her health, to economic opportunities throughout her life, and even her life expectancy.

That is simply unacceptable in the United States of America. 

If we want to create opportunities for everyone, we need rebuild whole communities and economies.

Developed during the first term - our Choice Neighborhoods initiative allows communities to transform a neighborhood, using public-private partnerships and proven mixed-use, mixed-finance tools to revitalize not just public housing, but create a ripple effect that brings partners and capital backinto our communities.

In 75% of the communities, we've seen rising home prices, lower vacancy rates, and more private investment.

The Promise Zones proposed by the President build on those efforts and focuses on integrating and aligning existing programs in communities that were hardest hit by the recession by targeting resources not just at housing, but job creation, public safety, and education.

HUD is uniquely qualified to assist in this effort -- we've been working successfully with so many communities around the country to build relationships, leverage federal investments, and encourage coordinated planning efforts for years to ensure that no child's life is determined by their zip code.

And we look forward to working with the White House--and you--to support your vision for the future. 

Effects of Sequestration

Unfortunately, that promising future is at risk as a result of Sequestration -- and no amount of partnership, belt-tightening, or smarter management of budgets will enable us to avoid its effects.

As we are all aware, Sequestration went into effect on March 1st.

I want to stress that these cuts will be deeply destructive, not just to HUD programs and those who rely on them--including hundreds of thousands of middle class and low-income individuals--but to communities across the nation, including those you serve.

Nationwide, about 125,000 individuals and families--more than half of whom are elderly and disabled--would lose assistance provided by the Housing Choice Voucher program.

Another 100,000 homeless and formerly homeless people--the majority of whom are families, disabled adults or veterans-- would be removed from their current housing or emergency shelter programs.

If that weren't bad enough, just as we are seeing a recovery in the housing market, sequestration will also likely to cause significant damage to our nation's housing market at a time when it is helping to lead our economic recovery. 

Sequestration would jeopardize FHA's ability to process loans when FHA represents a substantial portion of loan originations for the single family market as well as 25 percent of all new multifamily and substantial rehabs.

Cuts to housing counseling grants would result in 75,000 fewer households receiving vital foreclosure prevention, pre-purchase, rental or other counseling. This means fewer families making responsible, informed housing choices and greater risk throughout the market.   

Sequestration will also have a broader, more damaging economic impact on our still-fragile local economies.

While sequestration cuts $212 million from our HOME and Community Development Block Grant programs, communities lose nearly half a billion dollars in additional funding from private and other sources because they can no longer leverage Federal dollars.

Cuts to Public Housing Authority budgets would mean deferred maintenance and capital repairs on top of an existing capital needs backlog of over $25.6 billion nationwide -- endangering the future of these units.  

In 2012 CDBG created or retained 21,800 permanent jobs and more than 32.5 million people benefitted from CDBG -- sequestration would jeopardize those jobs and services.

Indeed, across all HUD's programs, sequestration will likely result in the loss of tens of thousands of jobs at a time when continued recovery depends on a stable job market, especially in the hard hit construction industry.

Not everyone will feel the pain of these cuts right away -- but the pain is coming.

And we certainly can't cut our way to an economic recovery that will strengthen and grow the middle class.

What we need is a balanced plan where everyone pays their fair share, loopholes are closed, and we strengthen our entitlement programs, not indiscriminate cuts that will damage our hard won recovery.

Compromise from both sides is exactly what the American people deserve.  Because we need to fix this--and not just for a month or two.  We have a lot of important work to do together and we can't keep lurching from crisis to crisis.

Over the next few weeks we will do our best to keep you informed about what to expect as a result of these cuts. 

But I need you to make the case to Congress -- not just for the housing programs we rely on like HOME and CDBG -- but for a compromise that creates jobs, gives people a pathway to the middle class, and ensures that hard work leads to a decent quality of life.

Because, in America, we don't leave neighborhoods behind because they're struggling -- we invest in their futures, together.

And we don't tell folks they're on their own when times get tough -- we help them as one nation and one people.

That's why I look forward to continuing to work with you to keep our economy and our recovery on track and rebuild and strengthen our cities.

Thank you.

###