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HUD Secretary Donovan Tells Housing Committee Next Four Years Present Challenges, Opportunities

By Eugene T. Lowe
January 28, 2013

Newton Mayor Setti Warren convened the Community Development and Housing Committee on January 17 to be briefed by HUD Secretary Shaun Donovan and Oakland Mayor Jean Quan. Donovan told the mayors that they had “the toughest jobs in the world and the best jobs in the world.” Looking back at the past four years when the country was on the verge of a great depression, he said that mayors should “get an enormous amount of the credit on how far the country has come since then.” He said, “In the big picture, we have some real opportunities in the next four years that we did not have four years ago.”

But according to the Secretary, there will also be challenges. Citing the Community Development Block Grant (CDBG) and HOME, Donovan said that if we don’t get the fiscal cliff resolved, we are looking at a 8.2 percent cut immediately and that is just the beginning if the overall fiscal dilemma is not solved. That is to say, the Secretary said, “How we balance revenue and spending is the single most important determinant to what happens over the next four years with programs such as CDBG and HOME.” The Secretary urged the mayors to make their voices heard. “And make them heard all across the country over the next couple of months to make sure we get this right,” the Secretary added.

Donovan told the mayors that, “We have a big opportunity to make the case for CDBG, HOME and the other programs you care about.” In the Recovery Act, CDBG money was the best job creator and that for every dollar spent $3.50 of private money “…comes to the table and is put to work in your communities. We must make this case together, this year and every year going forward, and, we have to look at how we can maximize the impact on economic development and jobs, especially with CDBG.” Although we are creating jobs, “…we are not creating them as fast as we would like to be. Using CDBG and reforming it over the next four years to make sure we get the best bang for the buck is very, very important to me,” Donovan said.

The Neighborhood Stabilization Program (NSP), which the Secretary said he is the proudest of, created almost 100,000 jobs, renovating and rehabilitating the most distressed housing across the country. Donovan also reported that foreclosures in December 2012 were at the lowest level since before the crisis began and that home prices increased by ten percent this past year. But, he caution “…that there is a lot more we can do to make sure that things do not go backwards.” Donovan said that Project Rebuild, which is an expansion of neighborhood stabilization, must be creatively funded as the third round of the neighborhood stabilization program is done next month. Sustainable communities money, a mere 270 million dollars, has been effective, but is “an effort that is really at risk.” The Secretary said that we must take the program to the next level.

Quan presented a best practice of how her city is addressing the issue of foreclosures. In a program with Wells Fargo, she said that her city disposed of nearly 2,000 blighted foreclosed homes. She said before foreclosure, Wells Fargo worked with the city to register their homes in order to do pre-inspections. Wells Fargo also helped the city go to other banks to pursue the same procedure of registering homes before foreclosure.

Oakland also initiated a Roots program, based on a program developed at Harvard. Wells Fargo again played a big role by taking 46 of its homes and enabled people to renegotiate their homes at the current value of their homes. This led to another program where the city uses a million dollars coming from HUD, a $2 million grant from a foundation, and $2 million from the Attorney General Settlement for a $5 million fund. Quan said that she is trying to get the $5 million fund matched. As of now, she will work with the $5 million in hand to have a non-profit buy homes and then sell them back to the owners.