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Prepared Remarks for Secretary of Housing and Urban Development Shaun Donovan at the Atlantic's Future of the City Forum

Location: Washington, D.C.

Thank you, Elizabeth -- for that introduction and for your leadership, and for having me today.

Let me also thank everyone at The Atlantic for continuing its proud tradition of pushing America forward on so many issues, from civil rights to foreign policy to urban issues.

I was reminded of it again for myself in a recent article called "Here Comes the Neighborhood." In it, Christopher Leinberger explains why communities across the country are demanding more walkable neighborhoods in cities and suburbs -- and the implications for our housing market and economy alike.

And so, today I want to talk with you about what HUD is doing to make that possible -- by tying the quality and location of housing to broader opportunities such as access to good jobs, quality schools, and safe streets.

I want to describe how we're changing the way we do business across the Administration to realize that ambition -- working not at cross purposes in our silos, but together, in common purpose.

And most important of all, I want to discuss how we at HUD and across the Administration believe that the "future of the city" is tied to the future of the region--the cities, suburbs and rural areas that surround them--how America's ability to compete and create jobs in the 21st century depends on our metro regions, and what the Obama Administration is doing to support them.

The "Drive to Qualify" Myth

We meet as our nation begins to emerge from a housing crisis that has left no community untouched. As we speak, we can see that home prices, after 30 straight months of decline, have leveled off over the last year.

We can see that mortgages are more affordable as a result of historically-low interest rates.

Even though I think we can all agree we are not out of the woods, the state of today's housing market is in significantly better shape than virtually anyone predicted even a year ago.

Earlier this week, the Administration released a scorecard of our housing recovery efforts to ensure that we are held accountable for producing results.

But the question I'd like to address to you today isn't simply how we've responded -- but rather, how we got here in the first place.

Certainly, it's no coincidence that neighborhoods who faced the brunt of the crisis--with the highest foreclosure rates and the deepest job losses--were often those with the least access to transportation, the most troubled schools, and the least economic opportunity.

But this economic crisis illustrates how when Washington fails to think about our nation's future the same way communities and regions think about theirs, every American pays the price.

For all the implications of "sprawl"--from job loss, economic decline and segregation, to alarming obesity, asthma rates, to the loss of habitat and climate change, to our dangerous dependence on foreign oil--all of them share by one fundamental problem:

The mismatch between where we live and where we work.

Whatever else we do to address these problems, America must find a way to connect housing to jobs.

And Americans are demanding it. Today, the average household spends more than half of its budget on housing and transportation. They have become American families' two single biggest expenses.

During the housing boom, real estate agents suggested to families that couldn't afford to live near job centers that they could find a more affordable home by living farther away. Lenders bought into the "Drive to Qualify" myth as well -- giving easy credit to homebuyers without accounting for how much it might cost families to live in these areas or the risk they could pose to the market.

And then, an odd thing happened when these families moved in -- they found themselves driving dozens of miles to work, to school, to the movies, to the grocery store, spending hours in traffic and spending nearly as much to fill their gas tank as they were to pay their mortgage...and in some places, more.

Just ask families in Atlanta, where these costs total 61 percent of family income. Or East Palo Alto, California where they consume over 70 percent of family budgets, leaving virtually no money for groceries, for taking the kids to the doctor, for child care or school -- and no time for family.

Or 80 miles to the east in Stockton, California where nearly one in ten homes are in foreclosure, two-thirds of homeowners owe more on their properties than the houses are worth, and the average commute is 46 miles each way.

In all, in the last century, transportation costs as a share of household expenditures have increased by a thousand percent.

We only need to look around us to know that the impact of this mismatch goes straight to our competitiveness as a nation.

The DC Metro area faces a shortage of 40,000 units of workforce housing. A recent study found that even families earning over $90,000 per year--in a region with low unemployment and a resilient economy--could not find affordable housing.

Businesses can't compete in a global economy without a workforce that can afford to live near them. While countries like China and Brazil are making historic investments in sustainable, green infrastructure, our businesses and entrepreneurs are stuck dealing with traffic congestion that costs them five times as much wasted fuel and time as it did a quarter century ago.

And so let me be very clear: at a moment in which we've seen more market failures than at any point since the Great Depression, few have been as catastrophic or had as many economic and environmental consequences as "Drive to Qualify."

Sprawling Development

Of course, sprawling development didn't begin with the housing boom -- it just got worse.

Lest we forget, the beltways and highways that fueled so much of the economic growth in the second half of the last century also drove investment away from the urban core and connected employment centers outside city limits were built by the Federal government.

But the truth is, today, we live in a world that is changing in three fundamental ways. First, we increasingly recognize that cities, suburbs and the rural areas that surround them share an economic future. Metropolitan regions are the engines of America's economy, generating 90 cents of every dollar and housing more than 80 percent of our population.

For instance, the metro area surrounding President Obama's hometown, Chicago, is home to two-thirds of Illinois' population and produces more than three-quarters of that state's GDP.

Even in rural states like Iowa, Arkansas, Nebraska and Kansas, metro areas are responsible for the majority of their economic growth. In these states, smaller urban centers are where the majority of economic opportunities are located.

When it comes to America's economic punch, metro areas--large and small--are where the action is.

Second, people are voting with their feet more and more -- moving back into central cities and inner ring suburbs. And communities from Seattle to Salt Lake are responding -- leveraging public dollars with private and philanthropic capital to expand transportation options and preserve the affordability of neighborhoods.

And third, challenges we once associated with cities-- from foreclosures to homelessness--have become surburbanized.

Here again, communities, in the absence of federal leadership, have responded -- largely responsible for reducing chronic homelessness by a third inside of five years.

Just this week, I was proud to deliver to the President the first ever federal strategic plan to end homelessness. A plan of that scale and ambition never would have been possible absent a real movement at the local level and a larger recognition that this traditionally "urban problem" is no longer confined to our city lines.

Homelessness is but one issue that reminds us that even as cities, large and small, and suburbs increasingly share challenges, the Federal government can do so much more to ensure they can share solutions.

Building Sustainable Communities, Supporting Local Innovation

Today, I will describe how we are doing just that.

From the moment President Obama was inaugurated, he directed us to not only catch up to what localities are already doing -- but to scale up those ideas, lead the charge and set the pace for change.

In February, HUD launched our new Office of Sustainable Housing and Communities -- allowing us to work directly with communities to support innovative planning and practice at the local level and helping to coordinate our investments with other agencies at the federal level.

In particular, HUD formed a Sustainability Partnership with the Department of Transportation and the Environmental Protection Agency. When it comes to housing, environmental and transportation policy, the Federal government must speak with one voice.

Using new tools drawn from President Obama's Recovery Act, the partnership began producing results very quickly. In cities like Detroit, you can see that we are not only talking to one another -- we are making funding decisions together.

In the first round of DOT's TIGER grant program under President Obama's Recovery Act, DOT awarded $25 million for the Woodward Avenue streetcar project in Detroit. HUD, DOT and EPA jointly reviewed the city's application.

HUD brought to DOT's attention community development activities already planned or underway in the Woodward Avenue corridor, which made the site a more attractive investment for DOT and the private sector.

EPA was able to highlight Brownfield remediation efforts in the vicinity of the project which will allow abandoned properties along the streetcar line to be "recycled" for economic development and affordable housing.

Not only does this comprehensive investment have the potential to fundamentally transform one of the most historic neighborhoods of the city -- for us, it is the model for the more effective award process we want to see in communities throughout the country.

Today, I am proud to say we are taking another big step forward in the Obama Administration's efforts to encourage more sustainable development as I announce $100 million for our new Sustainable Communities Regional Planning Grant program to encourage metropolitan and rural regions to integrate economic development, land use, and transportation investments.

Earlier this year, we issued an Advanced Notice and Request for Comment for the program, inviting feedback through a new online "Wiki" accessible via HUD's website and through an extensive listening tour around the country.

The idea was simple:

We wanted communities to tell us how we can use this program to help them build sustainably. And we hoped to send a very important signal that we in the Obama Administration are serious about being the kind of partner that listens and learns.

The response exceeded even our expectations. We received over 900 written comments, met with over 1,000 stakeholders in seven listening sessions, and staged webcasts that touched thousands more.

The feedback we received was overwhelmingly positive as well -- from mayors and other officials of both small and large communities, to business leaders in growing regions, to governors of states that have been hit hard economically.

Let me give you an example of how one region stands to benefit from this new way of working.

In North Carolina, as a result of a Marine Corps recruitment initiative, one seven-county region has grown by 55,000 people in less than 5 years -- putting enormous stress on the housing, schools, roads, health and public safety infrastructure.

These are the kinds of issues that no single county could address -- and state governments often don't or can't. Absent a regional planning entity that can comprehensively address these issues, these communities will continue to sprawl as we've seen in other regions, from Myrtle Beach to Virginia Beach, along the Eastern Seaboard.

North Carolina also reminds us that if the future of the city depends on the future of the region, we need to make sure that rural communities have a shot at these awards and participate in these programs. That is why we made 25 percent of these funds available to small towns and rural places.

Of course, as critical as regional planning is, the hard work of implementing plans happens at the local level.

That's why our $40 million Sustainable Communities Challenge Planning Grant program is targeted to cities and towns. We announced this program earlier this week in conjunction with the Department of Transportation in a joint grant program that includes up to $35 million for its "TIGER II" planning grant program.

Where the Transportation program will fund planning activities that relate directly to a future transportation capital investment, HUD's program will fund land-use related planning activities and affordable housing strategies that will be linked to that investment. This funding will make it possible for communities to hire staff with the expertise needed to modernize the building codes, zoning laws and other barriers communities face to sustainable development.

It will also help them work through the thorny legal issues and stage local workshops to ensure that environmental laws are addressed and that the full range of public voices are heard.

Each of these programs will build capacity -- helping communities acquire the tools and expertise they need to do the job themselves, whether it is hiring new staff, working with local officials to adopt new tools to link housing and transportation funding, or funding new partnerships across constituencies and disciplines.

While communities are increasingly demanding tools that allow them to build more walkable neighborhoods with accessible job centers, not everybody is a Denver or a Seattle. Some are leaders -- others want to become leaders.

That is why we have created two categories of funding, one to help prepare regional plans for sustainable development, and one to help implement plans developed by those regions who have been at this work for years.

And by making funding available to a wide variety of partnerships and consortia, from MPOs, COGs and State governments, to non-profit and philanthropic organizations, we'll be ensuring those communities don't have to go it alone -- and have the right tools to bring the right partners to the table.

And we're thinking ahead. For our budget request for FY 2011, we have asked Congress to create a tools clearinghouse that would give HUD the ability, for instance, to provide model codes for inclusionary housing learned in this year's process that communities could use as a starting point for getting this work done locally.

By exposing our grantees to the most cutting-edge methods and tools for planning and designing sustainable communities, we can ensure every community benefits from these programs and encourage maximum community participation.

Public Housing, Sustainable Development

Of course, sprawling suburbs are hardly the only communities struggling with sustainability. Throughout this crisis, in urban cores of older industrial cities, we saw 15 years of gains in neighborhood revitalization rolled back within a matter of not decades, not years -- but months.

This sharp decline after years of progress was magnified in minority communities -- where African Americans and Latinos have experienced not only a drop in homeownership rates and lost billions in wealth, but also suffered disproportionate declines in public health, educational and economic opportunities.

These developments point to a broader challenge facing localities: that you can't have a truly sustainable community if you promote segregated development patterns and concentrated poverty.

It was one of my predecessors at HUD, Henry Cisneros, who helped change the face of public housing by identifying a tool called HOPE VI that had been inherited from the previous administration and taking it to scale in communities across the country.

Some of us may think that public housing has nothing to do with the private sector -- but allow me to explain how it does.

HOPE VI wasn't just about tearing down buildings -- it was about tearing down ossified social and community development policies. It was about making the Federal government a partner to communities to build high quality affordable housing, with design patterns that attract people to live there.

With our Choice Neighborhoods demonstration soon underway, HUD will be bringing to bear private capital and mixed-use, mixed income tools to transform all housing in a neighborhood. Just as importantly, it will make the non-profits and private sector that have participated in HOPE VI full partners in this transformation.

But we won't remake public housing with just five projects a year. HOPE VI has transformed a handful -- and while we hope Choice Neighborhoods will transform many more, to really take the lessons we have learned to scale in communities across the country, we need to embed these principles into our broader public housing policy.

That's one reason why we are working with Congress on what we call our Transforming Rental Assistance initiative.

Today, six million households pay more than half their income for housing. Even worse, nearly half of the families who live in our public housing system live in neighborhoods of concentrated poverty. And with failing schools and little opportunity or hope, many of these families are trapped in poor neighborhoods for generations.


In many ways, it's because these families have no choice but to live in a parallel housing system. While new affordable housing can use public and private financing to create homes with a mix of incomes and uses, older federal programs are stuck with rigid, inflexible rules and bureaucratic hurdles left over from the last century. And so, we shouldn't be surprised that the communities themselves are isolated and segregated -- racially and geographically.

But we shouldn't accept it either.

That is why President Obama and I have proposed to bring our public housing system into the 21st century.

The time has come to put an end to the "separate but unequal" housing system by encouraging a mix of uses and incomes -- that taps into the expertise of new partners from the private sector and the third sector of non-profits and foundations to link public housing to investments in neighborhood schools, local businesses and other community anchors.

In so doing, we can ensure that public housing is seen as not just a neighborhood problem -- but as an asset to communities.

We can prove that housing and neighborhoods can be a platform for a new kind of sustainability -- equitable, inclusive neighborhoods, with opportunities for people of all ages, incomes, races and ethnicities.

Sustainable, Inclusive Communities

The goal of each of these efforts--at the regional level, at the community level and at the neighborhood level--is the same: to advance our shared priorities and values as Americans for the decades to come.

Priorities like jobs for the 21st century -- located closer to where we live, so businesses spend less money moving goods and services and people can spend less time commuting and more time with family.

Values like healthier, more inclusive communities -- with neighborhoods where kids can play outside and breathe clean air.

Communities where opportunities for people of all ages, incomes, races and ethnicities are never determined by their zip code.

These are the kinds of communities we all want our children to grow up in.

Ensuring they can isn't about telling localities what to do.

It isn't about telling them how to do it.

Rather, it's about offering them the resources and tools to help them realize their own visions for achieving the outcomes we all want.

It's about partnering with communities not so they make what would be considered the "right choices" inside the Washington Beltway -- but choices that work for them, for their needs, and their marketplaces.

It's about understanding that when you choose a home, you don't just choose a home. You also choose transportation to work and to school. You choose public safety for your children.

You choose a community -- and the choices available in that community.

It's about our belief as Americans that our children's futures should never be determined--or their choices limited--by their zip code.

A belief that, in America, we are only as strong as our neighbor, our regions are only as strong as our cities -- and that we succeed together and we stumble together, as one nation, one people.

If, in this new century, we grow our communities and our economies out of this fundamental principle, then I have no doubt our America and our children's America will be a strong, prosperous America infused with the same sense of purpose, opportunity and resolve that have always defined us.

That's the path we are on the precipice of at this moment.

That is the future of the city.

May we begin realizing it today.

Thank you.

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