Statement by
The Honorable Mel Martinez
before the
U.S. Senate
Committee on Appropriations
Subcommittee on VA, HUD and Independent Agencies
March 13, 2002
Chairwoman Mikulski, Ranking Member Bond, Distinguished Members
of the Committee:
Thank you for the opportunity to join you this morning to outline
the proposed Fiscal Year 2003 Budget for the Department of Housing
and Urban Development (HUD).
The $31.5 billion HUD budget represents a funding level increase
of 7 percent over FY 2002. At a time when dollars are especially
precious, and the cost of homeland security is consuming many Federal
resources, this shows the President's commitment to improving housing
and communities.
By helping Americans become homeowners, ensuring affordable housing
opportunities for those who rent, renewing communities, and preserving
a safety net for the most vulnerable, this budget will enable HUD
to make a tremendous difference in the lives of millions of Americans.
The housing market in 2001 was extremely vigorous, and we entered
the new year with homeownership at a record high. Because we know
that homeownership gives families a stake in their communities and
creates wealth, the HUD budget makes owning a home a viable option
for even more Americans. President Bush and I are committed to expanding
homeownership - especially among minorities.
As a first step, our budget quadruples the American Dream Downpayment
Fund, to $200 million. This Presidential initiative will help an
estimated 40,000 first-time homebuyers a year overcome the high
down payment and closing costs that are significant obstacles to
homeownership.
A new tax credit for developers of single-family affordable housing
will promote homeownership opportunities among low-income households
by supporting the rehabilitation or new construction of thousands
of moderately priced homes in low-income urban and rural neighborhoods.
This credit of $1.75 per capita matches in size the existing Low-Income
Housing Tax Credit and like the existing Credit would be administered
by the States. As these new homes are occupied by people who were
previously renting, their old apartments will become available for
others to rent, thereby effectively increasing the supply of affordable
rental apartments in many locations.
Our budget proposes tripling funding for the Self-Help Homeownership
Opportunity Program (SHOP) to $65 million, as committed to by the
President last spring. That will make possible the construction
of an additional 3,800 homes for disadvantaged Americans. SHOP is
an excellent example of government maximizing its resources by working
with private-sector partners like Habitat for Humanity.
Another exciting homeownership initiative targeted at low-income
families will allow them to put up to a year's worth of their Section
8 rental vouchers toward a home down payment. Because we consider
housing counseling a valuable tool for prospective homebuyers and
renters, we propose funding the program at $35 million - a $15 million
increase over the previous fiscal year. The increase in sub-prime
lending has made financial literacy more important than ever; armed
with the facts, a consumer is far less likely to be victimized by
predatory lending.
While we consider homeownership to be an important goal, we recognize
that it is not an option for everyone; therefore, our budget preserves
HUD's commitment to expanding the availability of affordable housing
for the millions of Americans who rent their homes.
The Section 8 tenant-based program today assists nearly two million
families. Our budget provides an additional 34,000 housing vouchers,
an increase of one and one-half percent. The budget also dedicates
$16.9 billion to protect current residents by renewing all expiring
Section 8 contracts.
To encourage the production of moderate-income rental housing in
underserved areas, the HUD budget would reduce the mortgage insurance
premium for Federal Housing Administration (FHA) multifamily insurance.
Three times over the last eight years, HUD has been forced to shut
down our multifamily mortgage insurance programs because of lack
of credit subsidy.
We made a commitment to a comprehensive review of the credit subsidy
program. Through our review, we were able to lower premiums, create
a self-sustaining program, provide the industry with stable financing
at a much lower cost, and provide thousands of new opportunities
for rental housing across the country.
Today, I am happy to report that our FHA business is strong, both
for single family and multifamily housing. In fact, business is
so strong that if our insurance commitments continue at the current
rate for the rest of the year, we may exceed the currently appropriated
limitations for both the MMI Fund and the GI Fund.
If that continues, I will have to come back here and ask Congress
to raise the statutory ceilings enacted last October.
I am particularly pleased with our multifamily business this year.
Through the first five months of the fiscal year, FHA has issued
insurance commitments totaling close to $1.4 billion - compared
to $900 million for the same period a year ago. That is up 50 percent.
Many in the industry and some in Congress were worried that raising
the insurance premium would damage the multifamily industry. Clearly,
that has not happened.
The 2003 budget gives HUD new resources to further our mission
of supporting the nation's most vulnerable. This includes low-income
families, homeless men and women, the elderly, individuals with
HIV/AIDS, victims of predatory lending practices, and families living
in housing contaminated by lead-based paint.
Let me highlight just a few of our proposals.
To better coordinate the work of the many Federal agencies that
reach out and provide a continuum of care to homeless men, women,
and families, the budget calls for doubling HUD funding for the
newly reactivated Interagency Council on the Homeless. Additionally,
converting three competitive homeless assistance programs into a
consolidated grant will eliminate the workload and expense of administering
three separate programs. More importantly, it will give local jurisdictions
new discretion in how those dollars are spent.
HUD's Lead Hazard Control program is the central element of the
President's effort to eradicate childhood lead poisoning in ten
years or less. The HUD budget will fund the program at $126 million,
a substantial increase over the previous year.
The budget also proposes spending $251 million under HUD's Section
811 program to improve access to affordable housing for persons
with disabilities. And many of the additional 34,000 Section 8 housing
vouchers will aid non-elderly, disabled individuals.
Initiatives such as the HOME Investment Partnerships Program and
the Community Development Block Grant (CDBG) address the nation's
critical housing needs and stimulate economic development and job
growth. Combined, these two programs will distribute an additional
$200 million in formula funding to State and local governments.
We have increased CDBG formula grants next year by $95 million,
to $4.4 billion. In addition, we have proposed changing the distribution
of CDBG formula funds by reducing the size of grants going to the
wealthiest communities. This will help bring dollars into those
areas where they can do the most good.
I am excited about a brand-new concept to address the large backlog
of repair and modernization projects in public housing. The Public
Housing Reinvestment Initiative represents a new way to leverage
the value of public housing by allowing public housing authorities
(PHAs) to borrow funds to make needed capital improvements. This
will unlock the value of public housing assets by allowing PHAs
to convert public housing units to project-based vouchers. The PHAs
can obtain loans by borrowing against individual properties - similar
to private-sector real estate financing.
Innovative thinking like this represents a departure from the way
things were done so often in the past - but being effective does
not have to mean spending more money. Government works best when
government serves as steward and facilitator, and measures success
through results. By facilitating the involvement of new local partners,
the Public Housing Reinvestment Initiative will breathe new life
into public housing communities.
I am proud of the HUD budget and the way it reflects the Administration's
commitment to efficiency, accountability, and the principles of
excellence expressed through the President's management scorecard.
When government spends efficiently, the funds go much further. We
reach more citizens. We help to change more lives.
The people of HUD know that the American Dream is not some unattainable
goal, because we see it achieved every day, so often by families
who never imagined owning their own home or reaching economic self-sufficiency.
Through our budget - and the continued commitment of President Bush
- citizens will have tools and opportunities they can put to work
improving both their lives and their communities� as they travel
the road to achieving their own American Dream.
I would like to thank each of you for your support of my efforts.
The Subcommittee's guidance throughout the appropriations process
last year was invaluable. I look forward to working with you in
moving the Fiscal Year 2003 HUD budget forward, and I welcome your
continued counsel as we work together on behalf of the American
people.
Thank you.
Content Archived: June 25, 2010
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