Prepared Remarks of Secretary Shaun Donovan at the 21st Annual Affordable Housing Conference of Montgomery County Summit
North Bethesda, MD
Monday, May 7, 2012
Thank you, Senator Sarbanes, for that kind introduction, and for more than four decades of leadership.
I’d also like to thank Ike Leggett, as well as Barbara Goldberg-Goldman and Norman Dreyfus for bringing us together here today.
I particularly want to recognize the veterans who are in the audience -- heroes willing to sacrifice everything for the country they love. And I’m proud to represent an Administration that’s working hard to ensure you have the safe, decent housing you deserve.
Just this morning in New York, I had the honor of speaking on a panel with Tom Brokaw, former Chairman of the Joint Chiefs of Staff Admiral Mike Mullen, and champions of American veterans like Senator Patty Murray to discuss issues surrounding veterans housing -- and I was proud to tell them about the remarkable progress we’ve made in saving veterans from homelessness.
Already, thanks to President Obama’s Recovery Act and innovative tools like the HUD-VASH program for homeless veterans, in the last year alone we were able to get nearly 1-in-5 veterans off our nation’s streets.
With that kind of success, despite a tough budget environment, we’ve proposed additional funding for HUD-VASH, ensuring we can end veteran homelessness by 2015.
And I pledge to you today to do everything in my power to ensure we do.
Finally, I’d like to thank the man you’ve chosen to honor -- my friend, colleague and predecessor Henry Cisneros.
It’s particularly appropriate that Henry, who spent a lifetime fighting to ensure access to opportunity for all Americans, should receive an award named after Robert Weaver, HUD’s first Secretary and the architect of the Fair Housing Act.
Indeed, Henry’s extraordinary legacy at HUD is one we strive to build on every day. In fact, at least two or three times a week, I’m in a meeting where staff says something like, “Well, when Henry Cisneros was Secretary...”
Or if I propose an idea, I get a response like, “Right, we did that when Henry Cisneros was here.”
Honestly -- after three years, Henry, I’m getting a little tired of it.
But seriously, Henry’s legacy is one that thousands of families can literally see all around them. Through his pioneering work on the HOPE VI public housing revitalization program, he not only changed the lives of more than 90,000 families once trapped in crumbling public housing.
He taught all of us the real power of a mixed-use, mixed-income approach to transform our communities -- of using every tool in our toolbox to create quality, affordable housing in communities of choice and opportunity.
And that’s what I’d like to discuss today -- how the Obama Administration is building on the tools Henry pioneered to help partners from the public, private, and nonprofit sectors not only tackle, but solve, the toughest challenges facing their communities.
New Tools for Affordable Housing
You all know the scope of those issues here in Montgomery County. Despite being one of the country’s most affluent communities, recently you’ve begun to see shifting demographics.
And with those shifts, new challenges have emerged. From new populations--immigrant families and others priced out of the Washington DC housing market--to a historic economic crisis that has impacted the middle class in unprecedented ways, the need for affordable housing has never been greater.
As a result, right now nearly half of all renters in Montgomery County pay more than 30 percent of their income on housing -- and to afford a modest, 2-bedroom apartment in this area, someone earning minimum wage would have to work four jobs.
Frankly, that’s not sustainable -- and the Obama Administration is committed to using mixed-finance tools to ensure communities like yours can provide quality, affordable homes for the families who need it most.
That’s why our budget’s investment in the HOME Investment Partnerships program is so important -- and I want to thank Barbara and Conference leaders for pushing back against unfair attacks on the program, and helping Capitol Hill understand the critical work it has done over the past two decades to produce more than a million affordable homes.
It’s why our proposed FY13 budget requests $1 billion for the National Affordable Housing Trust Fund to provide the consistent, flexible, and transparent funding we need to build more affordable housing.
At a time when Worst-Case Housing Needs are at an all-time high--having lost one-and-a-half million homes from our nation’s affordable housing stock inside of a decade--we need these resources more than ever.
And I tell you today: we are going to fight for them.
But this audience knows that putting the Federal government back in the business of affordable rental housing requires bringing HUD itself into the 21st century.
That’s why we forged a Rental Policy Working Group with our partners at the Departments of Treasury and Agriculture to identify ways we could better respond to the affordable housing needs of communities like yours.
One of the most important things to come out of that Working Group was ideas for reforming and expanding the Low-Income Housing Tax Credit.
Over the past quarter century, LIHTC has helped finance the construction and preservation of more than 1.8 million affordable rental homes, created more than 3.6 million jobs, and has leveraged more than $75 billion in private capital.
In fact, LIHTC was responsible for about half of all multifamily production in the 1990s -- and I’m proud of the work the Obama Administration did, through the Recovery Act, to save the tax credit during a time when private capital for affordable housing had all but dried up.
But despite this powerful tool, for too many of our local partners, it has been too difficult to use. Investors using LIHTC who wanted to access FHA financing had to follow FHA’s standard approval process -- which could take a year or more.
That not only leaves critical affordable housing stuck in the pipeline and discourages other potential partners from investing in the first place -- it also leaves millions of dollars of private capital on the sidelines at a time when we needed it most.
That’s why in February, with the leadership of Acting FHA Commissioner Carol Galante, HUD announced a new pilot program in four cities to streamline the approval process -- which could cut the time needed to review and approve financing applications from a year, to as little as 90 days.
Last year, FHA endorsed more than half a billion dollars in commitments for LIHTC projects, a staggering 150 percent increase since President Obama took office -- and with this pilot program, we expect those numbers to go even higher.
It’s all part of our renewed effort to expand access to mixed-finance tools like LIHTC -- which is why the President’s proposed FY 2013 budget includes a basis boost proposal to increase the tax credits available to preserve federally assisted housing and would allow for income averaging. This will be especially helpful for tax credit properties in regions like Montgomery County that have high rents.
Of course, no kind of affordable housing is in greater need of these innovative tools than public housing.
Right now, public housing is at a crossroads. With a capital needs backlog of $26 billion and chronic funding shortfalls, we have already lost 150,000 units in the past 15 years.
At the same time, with 7 million households paying more than half their income for housing, living in substandard housing, or both, the need for affordable housing is growing.
Indeed, with about 1,500 public housing units in Montgomery County, but more than 30,000 people on the waiting list for public or HUD-assisted housing, you understand this crisis better than most.
But for too long, antiquated rules prevented anyone but Federal government from investing in the success of these properties. That’s why I was so proud that last year Congress agreed to a demonstration that would allow these properties to access private capital and equity -- just like any other affordable housing is able to do.
This demonstration will allow public housing authorities and owners to leverage private funding to address the capital needs of tens of thousands of publicly owned homes across the country -- helping federal dollars go further in today’s tight budget environment.
Building Inclusive, Sustainable Communities
But as Henry’s success with HOPE VI also taught us, it’s not just homes that can be preserved and transformed by this innovative approach -- it’s whole communities.
Indeed, with our Choice Neighborhoods initiative, the Obama Administration is building on Henry’s legacy by bringing to bear the mixed-use, mixed-income approach of HOPE VI not just to public housing -- but to all HUD-assisted housing in distressed neighborhoods.
Now, Montgomery County understood the promise of tools like these earlier than most -- establishing “inclusionary zoning” as far back as 1974, well before many communities saw how a mix of affordable and market-rate housing could both provide homes for families, and reduce neighborhood poverty.
Indeed, inspired by your success, when I was housing commissioner in New York City, we used this approach on the waterfront in Brooklyn and on the west side of Manhattan around the new High Line park -- ensuring that the housing development in those emerging neighborhoods included apartments affordable to low and middle income families so everyone could share in the success of the economic development in those neighborhoods.
By rezoning the community in a way that allowed developers to build higher if they set aside 20-to-30 percent for affordable homes in the area, we were able to provide an incentive for developers while at the same time meeting the needs of families already living in the community.
And if you walk the streets of Greenpoint today you can see new bars and restaurants for young families right next door to delis and shops with signs written in Polish.
Now, already 20,000 multifamily homes throughout Montgomery County are located within a half-mile of existing or proposed rail lines -- connecting housing to jobs, and reducing transportation costs for families struggling to get by. But as the population grows, that need is only going to grow as well.
Indeed, communities across the country are facing these kinds of tough decisions -- and with the average American family spending 52 cents of every dollar they earn on housing and transportation costs, tackling these challenges has become critical not just for localities, but for our economy.
That’s why HUD joined with our partners at DOT and EPA to provide $270 million in Sustainable Communities grants to help localities reduce housing and transportation costs and become more economically competitive.
In Baltimore, for example, leaders from five counties are using a $3.5 million HUD grant to connect public transportation to the job centers that drive growth, while simultaneously strengthening workforce training.
These kinds of investments represent the smart government approach our communities need to stretch dollars further -- and I hope you’ll join us in fighting for them in HUD’s budget.
Indeed, to get the most of federal investments, communities really need to able to plan how to use them. That’s the theory behind HUD’s Consolidated Plan -- but for too long, the Federal government hasn’t been able to provide communities with the data and technology they need to target housing and community development resources with real precision.
That’s why today, I’m proud to announce the brand new “eCon Planning Suite,” which provides a new set of tools, including new data, a user-friendly mapping tool and a new, streamlined electronic template to help communities meet their economic development needs.
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 think it’s another way you will be able to extend not only CDBG dollars, but just as importantly, any other dollar that they touch, be they federal, state or local, public or private.
A New Kind of Federal Partner
All this work rests on a simple truth: at a moment like this, when every dollar is precious, the Federal government needs to be using every tool at its disposal.
Henry Cisneros understood that two decades ago. All of you understand it. You know that to preserve affordability for the long-term, we literally cannot afford to have any partner from any sector on the sidelines -- that to create an economy built to last, we have to bring all our partners to the table.
Because with every crisis comes an opportunity.
Well, this moment is our opportunity -- to lead our communities into the 21st century, using 21st century tools.
You know the power of these tools -- and in the Obama Administration, you have a federal partner who does as well.
A partner willing to bring the full scale of America’s public, private, and third sectors to bear -- so that we can not only address our communities’ toughest challenges, but solve them once and for all.
Working together, I know that we will. Thank you so much for having me here today.