Testimony of the Honorable Andrew Cuomo
Secretary of Housing and Urban Development
Subcommittee on VA, HUD and Independent Agencies
Committee on Appropriations
United States House of Representatives
March 8, 2000
Chairman Walsh, Ranking Member
Mollohan, members of the Subcommittee, thank you for inviting
me here today. It's a pleasure to appear before this Committee
to discuss HUD's proposed FY 2001 Budget -- HUD's strongest budget
in twenty years.
Mr. Chairman, last year we were
able to accomplish great things together. Under your leadership,
we were able to reach bipartisan agreement on many fronts --
public housing, economic development, homeownership, and rental
housing. Our ability to work together will be the key to making
HUD's mission of empowering communities a reality. I look forward
to another year of cooperation and results.
HUD's FY 2001 budget continues
our efforts to restore the public's trust in this Department,
and to open new doors of opportunity for people who are not yet
benefiting from the current wave of national prosperity. This
year, HUD's budget request is $32 billion -- a $6 billion increase
over last year. It offers opportunity and security for millions
of Americans. It builds on the strong foundation that we have
built at the Department over the past three years, both on the
budget side and the management side.
In many ways, this is a landmark
budget proposal. It represents the President's confidence that
HUD is better positioned than ever to help communities take on
the new challenges of the 21st century.
This budget is a direct outcome
of the management reforms we have put in place over the past
three years. I am convinced that we now have the tools, the resources,
and the capacity to wisely and responsibly spend the funds we
Our management reforms have succeeded
in transforming HUD into an agency that puts communities first.
Fighting fraud, waste, and abuse, our Public Trust Officers are
cracking down on those who misuse taxpayer dollars. Renewing
our commitment to first-class customer service, our Community
Builders are connecting people to the full range of HUD resources.
As a result, HUD today is back in business -- back in the housing
business, in the economic development business, and in the community
This past year, especially, has
been a banner year for HUD. President Clinton kicked off his
New Markets Initiative with historic visits to the Pine Ridge
Indian Reservation, East St. Louis, Los Angeles, the Mississippi
Delta, Central Appalachia, and other inner-city and rural communities.
The message? These are the emerging markets of the new century.
They are the places that will provide the consumer and labor
markets needed to fuel economic growth in the future.
We have also broken the gridlock
on affordable housing. After a four-year break, Congress approved
new housing vouchers in each of the past two years. This year's
budget builds on this progress, with important advances for affordable
and special needs housing, including 120,000 new housing vouchers
to help meet the "worst case" housing needs of low-income
families struggling with rising rents. We are seeking increased
funding to continue the transformation of public housing. And
increased funding for Fair Housing will help ensure that all
Americans have equal access to decent and affordable housing.
The budget also proposes to expand
the successful Continuum of Care program for homeless assistance
and prevention -- a winner this past year of the prestigious
Innovations in Government Award from Harvard University and the
Ford Foundation. The national survey of homelessness in America,
conducted by the Census Bureau, showed that we are on the right
track with the Continuum -- but with 600,000 Americans still
homeless each night, there is still much more to do.
In the past year, we launched
a major commitment to address one of the key challenges facing
us in the new millennium -- the graying of America. Our budget
requests increased funding for HUD's new Housing Security Plan
for Older Americans -- helping seniors stay in their own homes
as long as possible, increasing funding for the successful Section
202 elderly housing, converting existing elderly housing to assisted
living facilities, and in 200, building new assisted living facilities.
We have seen historic, across-the-board
gains on the homeownership front -- more American families own
their homes today than at any time in our history. With higher
loan limits and through internal reforms, a revitalized FHA is
now on the leading edge of the homeownership boom, serving minorities,
first-time home buyers, and cities in unprecedented numbers.
This year's budget request positions the FHA to do even more.
And we are investing more than ever in our Native American programs
to boost homeownership in Indian Country.
This year we are also proposing
to tap the capacity -- and the commitment to social justice --
of the faith-based community. Through our Center for Nonprofit
and Interfaith Partnerships, a new $20-million initiative, we
will expand access of community and interfaith partnerships to
HUD programs and help build new public-private partnerships at
the local level.
Finally, we are more committed
than ever to building safe, secure communities. The dramatic
reduction in violent crime has been one of the great success
stories of this past decade. Our budget contains several initiatives
to further reduce the scourge of gun and other types of violence,
both in public housing and elsewhere. Without safety there can
be no prosperity.
Overall, this new budget affirms
our progress. HUD, clearly, is back in business. These initiatives
will allow America's communities to make the most of this unique
moment in our nation's history. Together, they will put this
record prosperity to work for everyone, everywhere.
HUD's FY 2001 budget addresses
four major challenges: (1) economic revitalization of our nation's
communities by investing in new markets; (2) increasing affordable
housing and boosting homeownership; (3) ending discrimination
in housing through enforcement of our Fair Housing laws; and
(4) creating safe and livable communities.
AND INVESTING IN NEW MARKETS
As we enter the 108th month of
sustained economic expansion -- the longest our nation has ever
known -- we have much to celebrate: the lowest peacetime unemployment
and inflation rates in decades; the fastest and longest real
wage growth in 20 years; and an all-time high homeownership rate,
which reflects both economic strength and consumer confidence.
But there is another side to
this success. Statistics show that the members of our society
with the lowest incomes have actually grown poorer over the same
time period. Though most cities are doing well, one in six still
has unacceptably high levels of unemployment; in older suburbs,
crime, poverty, and homelessness have become more prevalent;
and in some parts of rural America, areas persist that are virtually
untouched by the economic boom.
In his State of the Union message
earlier this year, the President addressed these people and places
when he said: `To keep our historic expansion going, we need
a 21st century revolution to open new markets, start new business
and hire new workers right here in America -- our inner cities,
poor rural areas, and on Indian reservations."
With this FY 2001 budget, HUD
is on the front lines of this 21st century revolution, building
on HUD's successful track record of promoting business investment
and job creation in underserved communities. Over the past seven
years, we have retooled our job creation and business investment
programs, creating hundreds of thousands of jobs in both urban
and rural communities across the United States.
HUD's economic development initiatives
will not only help spur the economic revitalization of distressed
communities, they will contribute to the continued economic growth
of the nation as a whole. The goal of these initiatives is straightforward:
extend the national prosperity to people and places left behind.
CDBG.Last year we celebrated the 25th anniversary of
the Community Development Block Program. A pioneer of devolution,
CDBG has developed a proven record as the most flexible federal
aid to both cities and smaller rural communities. This year's
budget request builds on 25 years of success, with a request
for $4.9 billion, up $119 million over last year, and $195 million
over the past three years. However, the real increase for this
program is larger than these totals imply. By reducing set-asides,
we will increase the effective amount of formula funding that
goes directly to communities by $250 million, for uses they themselves
America's Private Investment
Companies (APIC). Last
year, Congress appropriated $20 million as an initial credit
subsidy for the cornerstone of the President's New Markets Initiative
-- for-profit investment funds known as America's Private Investment
Companies (APIC). APIC will make sorely-needed private capital
available to larger businesses that are expanding, relocating,
or joint venturing in inner cities and rural areas.
As we did last year, HUD is requesting
$37 million to fully fund APIC. These funds will subsidize and
secure $1 billion in privately issued, federally-guaranteed loans,
along with $500 million in private equity commitments, for a
total of $1.5 billion in new private sector funds that will create
an estimated 200,000 jobs. We have submitted authorizing legislation
for this initiative, which must be authorized by June 30, 2000.
Community Empowerment Fund
and EDI. The Community
Empowerment Fund streamlines two existing HUD programs that are
important tools for local communities to create jobs and attract
business investment: our Economic Development Initiative (EDI)
grants and Section 108 guaranteed loans. Overall, our budget
seeks $1.2 billion in loan guarantee authority under Section
108 of the Housing and Community Development Act.
This year, HUD is requesting
$100 million in EDI grant funds. The $100 million in EDI grant
funds is expected to leverage $500 million of the Section 108
guaranteed loan funds, and create an estimated 73,000 jobs. These
grants and guaranteed loan will leverage substantial additional
private sector commitments. Together, they will be used to create
revolving loan funds for small businesses, to build inner-city
shopping centers, retain or expand industrial facilities, expand
and modernize businesses, and to support other job creation/welfare-to-work
Empowerment Zones. Over the past 5 years, HUD has helped
create Empowerment Zones and Enterprise Communities (EZ/ECs)
in more than 75 urban communities. In almost all of these places,
the EZ/ECs have achieved success in leveraging private dollars
and expanding job creation. We estimate that more than 40,000
people have been placed in jobs as a result of EZ/EC programs,
some $10 billion in public and private sector investments have
been committed to these places, and more than 30,000 businesses
have received assistance.
In short, EZs and ECs have successfully
combined tax credits with federal grants and loans along with
local resources to attract billions of dollars private sector
investments. Accordingly, we are requesting $150 million in mandatory
funding for the fifteen recently selected Round II Empowerment
Zones, under Title XX of the Social Services Block Grant program.
We are also proposing to designate ten additional Empowerment
Zones (eight urban and two rural). In addition, the President
has proposed significant extensions of the wage tax credits and
other tax incentives for business investment that were such an
important part of the success of the first Empowerment Zones.
Other Economic Development
Initiatives. HUD will
participate in the fourth phase of the National Community Development
Initiative (NCDI), to be funded at $24 million. This highly successful
public/private partnership will help build the capacity of CDCs
and other community-based organizations, allowing them to continue
their impressive track record as engines of economic growth in
In 1998, the Rural Housing and
Economic Development Program was created to fund innovative strategies
for rural housing and economic growth. The FY 2001 Budget requests
$27 million for this program, an increase of $2 million over
last year. We will continue to work closely with other Federal
departments, including Agriculture, Commerce, and the Appalachian
Regional Commission, to design effective responses to the needs
of our nation's rural communities.
In addition, new authorizing
legislation will be submitted in support of the President's Mississippi
Delta Economic Development initiative, with proposed HUD funding
at $22 million. This is a government-wide effort to jumpstart
the economy of a significant region of the country that has been
left behind by the economic boom of the past decade. HUD will
work in partnership with other Federal agencies to capitalize
on our special expertise in housing and economic development
to help revitalize the region's economy.
We are also requesting an increase
in the highly successful Youthbuild program from $42.5 million
to $75 million. Youthbuild provides help to young people with
training in the building trades, as well as assistance in securing
high school diplomas. We estimate that the program will help
over 5,000 disadvantaged youth rebuild their communities at the
same time as they learn vital job skills.
ADDRESSING THE AFFORDABLE
At the core of HUD's mission
is the charge to provide housing that is decent, safe and affordable
to all. Despite the longest peacetime economic expansion in the
nation's history, it is actually becoming more and more difficult
for low-income American families to afford a decent place to
live. Rents have soared in many regions with strong economies.
In fact, worst case housing needs remain at an all-time high
of 5.3 households, growing especially fast among working families.
As a result, there is a greater need than ever for HUD's programs.
Our FY 2001 initiatives build
on recent efforts to reform and restore public trust in HUD's
housing programs. Historic legislation created the Mark-to-Market
program, which preserves project-based Section 8 housing while
bringing costs in line with the private market. We have cracked
down on program abuses. Our Real Estate Assessment Center is
on track towards meeting our goal of inspecting, for the first
time, all 40,000 properties in HUD's inventory of public housing
and multifamily insured or assisted housing. And more than 600
troubled properties have been referred to the new Enforcement
Center, with 45% of the cases resolved and revenues from fines
imposed in FY 99 up five times over the previous year.
Section 8 renewals and incremental
vouchers. HUD is requesting
$13.0 billion in new budget authority to renew existing Section
8 contracts -- covering 2.6 million rental units. In addition,
we are requesting $690 million for 120,000 new vouchers, the
largest increase since 1981. Two years ago, HUD got back into
the housing business with 50,000 new vouchers focused on families
moving from welfare to work. We topped that last year with 60,000.
With this year's request, we are taking the next step. These
new vouchers will be targeted as follows: one half, or 60,000
vouchers, will be "Fair Share" vouchers, to be used
by public housing authorities to reduce their waiting lists;
32,000 will be targeted to those moving from welfare to work;
18,000 will be for homeless persons; and 10,000 will stimulate
new housing production for very low-income individuals.
New housing production vouchers. Our proposal for new vouchers includes
the first Section 8 housing production vouchers in 17 years.
For decades, national housing policy has shifted back and forth
between production-oriented programs that focus on expanding
the supply of affordable housing, and income-based initiatives
that provide cash assistance that enables lower-income families
to afford decent rental housing. As we enter the 21st century,
it is clear that both approaches are needed if America is to
realize the goal of decent housing for all. We are proposing
10,000 housing production vouchers that, in tandem with the Low
Income Housing Tax Credit and FHA insurance, will leverage 40,000
total units (subsidized and unsubsidized).
Transforming Public Housing. Two years ago, Congress enacted landmark,
bipartisan public housing legislation, that brought working families
into public housing without sacrificing our historic commitment
to low income and very low income persons. Through our new physical
inspections system, we have now inspected every property in public
housing and the results are in: 84% of all public housing properties
are in sound or excellent condition, and customer satisfaction
surveys show that 75% of all public housing residents are satisfied
or very satisfied with their housing. That's a customer satisfaction
rating that beats the banking, the utility, and the retail industries.
HUD's FY 2001 budget continues
our efforts to transform public housing. We are requesting a
$54 million increase in public housing operating funds, to almost
$3.2 billion, or 100% of PFS. We also are proposing $2.96 billion
for the Capital Fund to help public housing authorities to modernize,
rehabilitate, or build public housing units that are in need
of significant repairs or replacement, an increase of $86 million
over last year's request.
Finally, we are requesting $625
million for HOPE VI, which is revolutionizing public housing
by replacing obsolete high rise or barracks-style buildings with
new, mixed-income, mixed-use livable communities and housing
vouchers. Through 2000, the program is expected to approve the
demolition of 100,000 units. By 2003, our goal is to approve
145,000 units for replacement with hard units or with vouchers.
Home Investment Partnerships
Program (HOME). Since
it was created ten years ago, the HOME program has become a proven
housing rehabilitation and production tool in both urban and
rural America. We are requesting $1.65 billion, a $50 million
increase over last year's level. This will provide approximately
85,000 units of affordable housing for both owners and renters
through a combination of new construction, rehabilitation, acquisition
and tenant-based assistance.
Homeownership. Over the past three years, we have done
more than ever to bring homeownership to underserved markets.
I'm proud of the record homeownership rate of 67%; but the real
success is what we've done to close the gap for minorities, first
time buyers, younger couples, residents of cities. We have increased
affordable housing goals of the GSEs to 50%. With higher FHA
loan limits enacted by Congress, in FY 1999 we boosted FHA loans
to a record 1.3 million -- 40% of which were to minority buyers.
Automated underwriting has reduced underwriting times for applicants.
And the process for disposition of foreclosed properties has
been improved dramatically.
Our FY 2001 budget builds on
this record of success. In FY 2001, FHA is proposing to develop
a new hybrid adjustable-rate mortgage product. In the conventional
market, hybrid ARMs have proven very popular because they offer
the security of a fixed-interest rate for between 3 and 10 years,
while they are more affordable than 30-year fixed-rate mortgages,
because they carry lower interest rates. Adding this product
to FHA's lineup should help 55,000 additional families become
homeowners in FY2001, and will result in an additional $114 million
income for the Federal government.
Native American assistance. Native American housing needs will be
served through the Indian Housing Block Grant Program, and the
Indian Housing Loan Guarantee Program. Overall, HUD's request
for Native American programs is the largest ever -- $730 million,
an increase of $37 million, including an increase of $30 million,
to $650 million, for Indian Housing Block Grants.
Homelessness and Special Needs. Over the past seven years, we have made
significant progress on homelessness in America. When I first
came to HUD, the federal government had been spending about the
same as the state of New York on homeless assistance. Since then,
we've more than doubled the amount of federal homeless assistance.
But this is more than just the
dollars and cents. It is about a new, comprehensive approach,
the Continuum of Care, that we've put in place a holistic approach
aimed at moving people into permanent housing and self-sufficiency.
According to a study by Columbia University, we are now serving
14 times more people than we were in 1993. This progress was
recognized when last year the Continuum won the prestigious Innovations
in Government Award from Harvard University and the Ford Foundation.
By all measures, the Continuum
of Care is working. Accordingly, for FY 2001, we are proposing
$1.2 billion for homeless assistance, an increase of $180 million.
We also propose to shift the source of funds for Shelter Plus
Care contract renewals to the Section 8 Housing Certificate Fund,
creating additional savings for localities and homeless service
providers. This increase, plus 18,000 new rental vouchers to
create permanent housing solutions, will address the housing
needs of the most vulnerable Americans -- those making a transition
from the streets back into homes and community life.
We are also proposing an increase
of $28 million in the Housing Opportunities for People with Aids
program (HOPWA), to $260 million. The Centers for Disease Control
estimates that between 650,000 and 900,000 Americans are living
with the HIV infection. In addition to renewing all existing
programs, the funds requested in FY 2001 will provide for an
additional 5,100 housing units for persons with AIDS, bringing
the total to nearly 50,000 units nationally.
Elderly and the disabled. Our special needs programs also serve
the elderly and disabled. We are proposing $210 million for the
Section 811 program, which serves persons with disabilities,
increasing the FY 2000 enacted level by $9 million.
Recent decades have seen a dramatic
shift in America's population, with our elderly citizens leading
longer, healthier, and more active lives -- a shift that will
only accelerate in coming decades. The challenge now is to meet
the housing needs of this rapidly expanding population of elders.
Just as we work to save Social Security, we must also work to
provide housing security for our seniors.
Last year, Congress enacted major
elements of HUD's Housing Security Plan for Older Americans as
part of our FY2000 budget. This year, we are proposing a total
of $779 million for our elderly housing programs, an increase
of $69 million. We propose to increase funding for Section 202
housing to $629 million; $50 million to convert existing Section
202 housing to assisted living, $50 million for new assisted
living facilities; and another $50 million for service coordinators.
Within Section 202, we are also proposing up to $5 million to
fund a small number of "Intergenerational Learning Centers"
that will tap the skills and energy of seniors to help meet the
needs of children in daycare centers located in Section 202 housing.
JUSTICE FOR ALL ENFORCING
The Fair Housing Act prohibits
discrimination in the sale, rental, and financing of housing
based on race, color, religion, sex, national origin, disability,
or family status. Yet, even at the dawn of the 21st century,
housing discrimination, in both blatant and subtle forms, continues
to plague our country. Today's discrimination is often more subtle
than it was in the past, but it is no less real and no less damaging
to our social contract as a nation that values equality of opportunity
Two years ago, President Clinton
announced his commitment to doubling the number of fair housing
enforcement actions by the year 2000. To help complete this effort,
we propose to increase the Fair Housing enforcement budget by
14 percent -- to a total of $50 million.
Our budget request provides for
increased funding of both the Fair Housing Assistance Program
(FHAP) and the Fair Housing Initiatives Program (FHIP). In 2001,
the focus of FHIP will be on requirements for accessibility for
people with disabilities, with an emphasis on education and outreach
programs to housing providers.
In 2000, Fair Housing Partnerships
are being created to form a formal links between private fair
housing groups and State agencies. These partnerships will be
used in 2001 to provide training and technical assistance to
builders, developers, architects, building code officials, and
others on accessibility requirements through a nationwide Project
for Accessibility Training and Technical Assistance.
CREATING SAFE AND
Our communities face a number
of threats to sustainable development, from uncontrolled growth
to crime and drug abuse, from environmental hazards and a lack
of energy efficiency in housing to blight and under-investment
in vital community infrastructure. Many of these challenges call
for cooperative regional solutions that span jurisdictional lines.
Promoting Livable Communities. Congestion, hours-long commutes, a decrease
in the amount of open space, pollution, and other environmental
issues all have a detrimental effect on the livability of American
communities. HUD recently convened a two-day conference, called
Bridging the Divide, to focus on how cities, suburbs, and the
federal government can work together to achieve more livable,
sustainable communities. More than 200 state and local government
officials and civic, community, and business leaders participated.
A key theme that emerged from the conference was the importance
of revitalizing the core of our central city areas in order to
decrease the negative effects of suburban sprawl.
We are proposing a $25 million
Regional Connections initiative as a key part of the Administration's
livability initiative. These funds may be used by states, partnerships
of local governments, businesses and civic groups to develop
and pursue smarter growth strategies that cut across traditional
We also propose to double the
funding for the Brownfields Initiative, to $50 million in FY
2001. This will accelerate the Administration's previous commitment
to a four-year, $100 million program.
Because of an increased effort
on the part of the Federal government to reduce the exposure
of children and their families to lead poison, we are requesting
$120 million for HUD's Lead-Based Paint Hazard Control grant
program, a 50 percent increase. As part of a new national strategy
and by leveraging private funds, the goal is to eliminate childhood
lead poisoning -- including eliminating lead hazards in approximately
2.3 million units of housing by the year 2010.
Promoting Safe Communities. Despite the extraordinary success we
have achieved in reducing crime rates in public housing and elsewhere,
crime and gun-related violence poses a major threat to HUD's
obligation to help ensure "a decent home and a suitable
living environment for every American family."
Funds from a variety of HUD programs
including the Community Development Block Grant program have
long been available to help make areas in and around communities
HUD serves safer. This year, however, HUD plans a particular
focus on improving the safety of America's neighborhoods.
The FY 2001 budget proposes $345
million in Public Housing Drug Elimination Grant funds to support
efforts to reduce drug use and related activity and other crime
in and around public housing. Of the total, HUD has requested
$30 million for a Community Gun Safety and Violence Reduction
Initiative, which will help address the critical issue of gun
violence in and around the communities HUD serves.
Strengthening community partnerships. We have learned that a key component
of strong communities is the strength and capacity of their organizations.
Because of the trust they build and the strong connections they
forge, community and faith-based institutions can be uniquely
placed to help bring about community change. We are proposing
to support the work of our Center for Interfaith and Community
Partnerships with a $20-million initiative to help community
and faith-based organizations expand their capacity to supply
affordable housing, create economic opportunity, and increase
their use of HUD programs.
We are also proposing $69 million
in Section 107 technical assistance, including $37 million for
colleges and universities to carry out community and economic
development activities in their local communities. This will
include grant funds for several successful initiatives, such
as Historically Black Colleges and Universities, Hispanic Serving
Institutions, Alaskan and Hawaiian Serving Institutions, Community
Development Work Study, and Community Outreach Partnerships (COPC),
and New Markets University Partnerships in "New Markets"
areas. Another $5 million is proposed for new Tribal College
HUD's FY2001 budget reflects
the progress that HUD has made over the past three years. It
does more than add funds to programs: it's a budget that contains
innovative, smart, and creative proposals for addressing the
new challenges of the 21st century.
This budget gives those people
and places left behind a unique opportunity to share in this
Nation's overall success. Not with bigger government, but with
smarter government. Not just with additional resources, but by
more effective use of the resources we have. Not by top-down
mandates, but through menus of opportunity. And not by displacing
private markets, but by clearing the way for them to invest.
HUD today is leaner, smarter,
more effective than ever. The Nation is prospering economically
and at peace in the world. Our cities and rural areas, once lagging
behind, are doing better than they have in a decade. This budget
says one thing: let's build on this extraordinary success. Let's
not stop here. Let's bring this prosperity to every corner of
America. I look forward to working with Congress -- just as we
did last year -- to make this vision a reality, not just for
HUD, but for all Americans.
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