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Federal Document Clearing House
Congressional Testimony
March 19, 2002 Tuesday
SECTION: CAPITOL HILL HEARING TESTIMONY
LENGTH: 1700 words
COMMITTEE:
HOUSE APPROPRIATIONS
SUBCOMMITTEE:
VETERANS
HEADLINE: FY 2002 BUDGET FOR HUD
TESTIMONY-BY: MEL MARTINEZ, SECRETARY
AFFILIATION: U.S. DEPARTMENT OF HOUSING AND URBAN
DEVELOPMENT
BODY: STATEMENT OF
MEL MARTINEZ
SECRETARY U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
BEFORE THE
UNITED STATES HOUSE OF REPRESENTATIVES COMMITTEE ON APPROPRIATIONS SUBCOMMITTEE
ON VETERANS AFFAIRS, HOUSING AND URBAN DEVELOPMENT, AND INDEPENDENT AGENCIES
MARCH 19, 2002
Chairman Walsh, Ranking Member Mollohan,
Distinguished Members of the Subcommittee:
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). I look forward to working
with you as the budget deliberations get underway.
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 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 lowincome urban and rural neighborhoods.
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 are
funding the counseling program at $
35 million - a
$
15 million increase over the previous fiscal year.
While homeownership is an important goal, we recognize that it is not an
option for everyone; therefore, our budget keeps HUD's commitment to preserving
the existing stock and 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 onehalf 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 announces that we will reduce the mortgage insurance premium for Federal
Housing Administration (FHA) multifamily insurance. We will do this by notice,
effective at the start of FY 2003
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 remain at the present 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 trend continues, I will 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.
Despite the fears
expressed by some outside of HUD that raising the insurance premium would damage
the multifamily industry, that clearly 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.
HUD will continue our support for older Americans by providing
$
783 million for the Section 202 supportive housing for the
elderly program.
Predatory lending and property
flipping are abusive practices that continue to plague homebuyers in cities
across the country. Since April, our Housing Fraud Initiative in Baltimore has
resulted in 40 indictments, six federal arrests, two state arrests, 27
successful prosecutions, and 66 debarments. We have provided relocation
assistance to 46 families. We also developed the Credit Watch legislation that
was included in the fiscal year 2002 budget.
I am pleased with these
accomplishments, but we know there is more work to be done. HUD remains
committed to addressing the problems in Baltimore, and we feel confident that
the lessons we learn there will be beneficial to the rest of the country.
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 rental
assistance. 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 the Department's efforts. The Subcommittee's guidance
throughout the appropriations process last year was invaluable. Again, 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.
LOAD-DATE:
March 25, 2002