2007 National Partnership Conference
Corporate Community Investment
PREPARED REMARKS FOR
ROY A. BERNARDI
DEPUTY SECRETARY OF HOUSING AND URBAN DEVELOPMENT
FRIDAY, MAY 11, 2007
Thank you, Tom (Donohue). Good morning.
I am pleased to be part of this discussion. I congratulate the Chamber on the announcement of this partnership. A sound, visionary, and mutually beneficial partnership can revitalize old communities and provide powerful incentives for newer cities.
A city is more than a place on a map. Great cities are about people; their hopes, hard work, and investments. A great city is its people and their families. And a corporation can be a powerful part of that story.
So, I want to thank you, Tom (Donohue), the Chamber of Commerce, and the many sponsors for this conference. Your earlier panel discussions highlight the valuable contributions of corporate community partnerships. Community investment is a catalyst for jobs, housing, infrastructure, and growth. Schools, parks, libraries, and playgrounds are another positive result. As a city is developed, it gains its own distinctive personality, history, traditions, and values. People not only live together, they grow together, and often grow old together.
Pericles, the great mayor of ancient Athens, once said that "All good things come to the city because of the city's greatness."
Mayors love that comment. As a mayor, I saw the value of his words. Partnerships between citizens and business created great cities, places like London, Paris, Rome, and Athens. In America, our cities are newer, with less history. But we have great cities in this country...and we can have more. These great cities attract the best in art, music, scholarship, sports, and science. Our goal should be nothing less than to make each American city a great city. By that, I mean a distinctive city, a city that is a positive influence on its people, a place that attracts the best, a community that symbolizes respect, tolerance, and compassion. A great city inspires pride. It is somewhere you always want to call home...a place that feels like home...even when you are thousands of miles away.
The city and the corporation can create that distinctive personality together. This happened in places like Pittsburgh with steel, New York with finance, Akron with tires, and Los Angeles with the film industry. We see it with the great educational institutions in Boston, the high-tech corporations in Seattle, and the entertainment enterprises in Orlando.
In fact, most towns and cities have experienced corporate partnerships at some point in their past. For instance, Syracuse was once a company town for the builders of the Erie Canal. It became a company town again when the railroads came through. Stickly Furniture set up shop, followed by General Electric and Carrier. Today, it has a diverse economy, but an economy that benefits greatly from the Syracuse University. I mention that great school because it is an example of the power of partnership and community investment. Downtown Syracuse is in need of investment. In partnership with the city, the university purchased and renovated a large abandoned warehouse area, turning it into the new home of its school of architecture. The new campus will bring money, jobs, and homes to the downtown area. One study estimates that more than 2,500 residential units will be developed, which will house more than 4,000 people. This will triple the number of people living downtown now.
Last week, I saw another such transformation in Columbia, South Carolina. Again, in partnership with city government, the University of South Carolina is creating a technology center in an economically-depressed part of the city. It will bring jobs, corporate investment, and new homes to the center of the city, making Columbia a cutting-edge Silicon Valley in the South.
Right here in Washington we have watched the city's efforts to transform "U" Street by attracting new restaurants and clubs. There are similar efforts to revitalize "H" Street through new small businesses. We have seen how this city is coming back to life. We want to revitalize cities so that we do not end up with patterns of development that resemble donuts, where the city center is left crumbling and sits vacant, while everyone lives and works in a ring around it. That is not good economically and such patterns divide the community.
Small businesses can play a powerful role in revitalization and economic growth. In Syracuse, small businesses (with less than 100 employees) provided 93 percent of the job growth between 2003 and 2004. These businesses provide 55 percent of the jobs in the county and make up about 98 percent of all businesses. Small businesses should be part of the partnership mix. I hope they will be.
Government at all levels can be helpful in the formation and continuation of corporate community partnerships. And at HUD we have been working to enable such partnerships.
Let me give you an example. The HOME Investment Partnerships program is the largest Federal block grant to state and local governments dedicated to creating affordable housing for low-income families. Since 1992, more than 600 communities have completed almost 762,000 affordable housing units, including more than 319,000 for new homebuyers. In addition, more than 160,000 tenants have received direct rental assistance.
Each year the program allocates approximately $2 billion among hundreds of localities nationwide. There is a noticeable ripple effect: each HOME dollar allocated to a local jurisdiction traditionally leverages more than three dollars from other public and private sources.
In my view, this grant is vital for community development. That is why the President and the Congress have consistently supported this program. The flexibility of the block grant empowers communities to implement strategies tailored to their own needs. The emphasis on consolidated planning strengthens partnerships among all levels of government and the private sector in the development of affordable housing. Provisions for technical assistance and set-asides for qualified community-based nonprofit housing groups are extremely helpful. These are all important advantages to the program.
But I want to highlight the fiscal partnership promoted by this block grant. HOME's requirement that participating jurisdictions match 25 cents of every dollar in program funds mobilizes community resources in support of affordable housing. A participating jurisdiction must match every dollar of HOME funds used (except for administrative costs) with 25 cents from nonfederal sources. This match may include donated materials or labor, the value of donated property, proceeds from bond financing, and other resources.
The requirement for matching resources has been a highly effective way to foster partnership. Frankly, it has created a culture of cooperation in affordable housing.
In addition to the matching requirement, participating jurisdictions must reserve at least 15 percent of their allocations to fund housing to be owned, developed, or sponsored by experienced, community-driven nonprofit groups designated as Community Housing Development Organizations (CHDOs). Participating jurisdictions must ensure that HOME-funded housing units remain affordable in the long term.
There is another way to secure better partnerships through block grants. HUD administers the Community Development Block Grant or CDBG. This program was initiated 30 years ago. Since 1974, more than $116 billion in CDBG funds have been granted to help cities meet their community development needs.
But, the formula for the grant is not putting all the money where it is most needed. Some high-need areas receive smaller grants than they should. Some low-need areas receive disproportionately larger grants. Some communities with similar needs receive different amounts per capita. Well, the underlying problem is that the nation's demographics have changed over time while the formula remained the same.
So the President has proposed that the Congress change the allocation formula. Such a change will better meet the needs of urban areas and will provide funding in a more equitable, rational manner. We call this "formula fairness."
I am hopeful that Congress will allow my department the chance to achieve formula fairness. Such a change will be beneficial for many communities. For example, Columbia, South Carolina, which I mentioned earlier, would receive 40 percent more funding under the new formula. That kind of change makes a huge difference to a city like Columbia.
The President has also proposed a $200 million Competitive Challenge Grant. This would award bonus grants to communities that target and leverage funds to their most distressed areas. My department will work to boost performance measures with the CDBG to ensure that these critically needed dollars produce the results the program was designed to achieve.
We need to do all of this...and we will. HUD can be a strong, valuable partner in your efforts to enhance our cities. We have been in the "city business" from the beginning. And we know that working partnership make a profound difference, both financially and in quality of life.
The value of this conference is in its work to bring both cities and private corporations together. We can construct a shared vision that is good for both the city and the corporation's bottom line. We can develop partnerships that revitalize inner cities and energize the people who live there. We can become passionate advocates for our cities. We can create strong, close communities.
I propose that we leave this conference with such a commitment. If our partnership does produce greater corporate involvement in the future of our cities, then we will observe a timeless truth. Magnetically, all good things will be attracted to our cities in greater number.