Bodaken: A Beltway Perspective on HUD’s Budget & Reinvention

Michael, last January The Planning Report interviewed you, and you made the following statement: "Clearly we need a national commitment to housing and community development, one which prioritizes the rebuilding and sustenance of neighborhoods and communities. I believe that HUD will survive in some form, but clearly the department is under serious examination by the budget cutters, both Democrats and Republicans, and fundamental questions need to be answered regarding HUD's role in the future, not only for poor Americans, but middle class Americans as well." Give us an insight into how far this examination has gone, and what the consequences are likely to be. 

I'm not sure that there has been a serious examination of HUD. Nor has there been a serious examination of the nation's commitment to cities, neighborhoods and communities. 

There has been an ongoing effort in the administration to preserve the department. This effort has been largely successful. There has been a parallel effort by Congress to cut back HUD's funding, which has also been, unfortunately, successful. This move has obfuscated the need for people to understand the connection between the health of the nation and the health of our urban areas and neighborhoods. 

What is the significance or the proposed cuts, and with what effect on our cities and counties? 

The overall HUD budget, according to the HUD conference committee on appropriations, funded HUD for this fiscal year at $20.1 billion. This would equate to approximately a 20 percent cut in the HUD budget. 

Certain kinds of housing were hit harder than others. In particular, public housing was hit hard. Section 8 incremental assistance was also hit hard—by about 50 percent. Despite Congress' statement that they want to provide vouchers for families to have choices, they cut that amount significantly. 

On the other hand, Congress fully funded our preservation program for another year, and targeted the program for non-profit purchases. Changing the program to target nonprofit purchases was our goal a year ago when we set out to reform the program. So, I look around, and feel very fortunate. 

When we spoke in January, the President was proposing super block grants that would go to either cities or states, and that would consolidate not just homeless programs, but CBDG, the Home program, Section 202, and the 811 programs. Please give our readers a sense or how real such proposals now appear to be. 

What you have described is within the context of what people call reinventing HUD. Of the reinvention proposal that came out in February, I don't think that much of that agenda has been enacted by the I 04th Congress. 

Whether or not it will be enacted by the next Congress is equally uncertain to me. I believe there will be some type of legislative vehicle for housing next year. A lot of "reform" got attached to the appropriations bill this year because Congress didn't see fit to enact an authorization legislation. This is Washington-speak for the LA equivalent of the LA City Council Housing and Community Redevelopment Committee not having an opportunity to affect the City's budget through City Council. 

That is what is happening in Washington D.C. these days. Everything is being rolled into appropriations vehicles or the budget, and authorizing committee were not given an opportunity to affect much. 

There are two public housing bills on Capitol Hill. Both dramatically change the relationship between HUD and Housing Authorities. Those bills could move; I don't know if the HUD reinvention will move next year. 

Michael, you indicated last year that the direction in Congress was for more decentralization and local control. Your fear was that if they delegate the mandate, they need to give the cities both the funds and flexibility to make the changes. Is that still your assessment and how grounded is your fear? 

Yes. I think that they did, in some ways, give cities certain flexibility, although not as much as the cities need. I think they will do more of that with this authorizing legislation that should emerge next year. 

Congress is not providing cities the funds they need to affect these changes. You can't cut the overall HUD budget, even at the Senate level, and expect that housing and community development program will be funded as well, or better than they were before. 

Last year you indicated that HUD had, in the past, "focused exclusively on low and very low income constituents; this is critical for its survival, but in this new environment, is not sufficient." You went on to say: "HUD has to build links to people who haven't felt that they have been receiving services, in order for the agency to survive." Is the department moving in that direction?

The department could still do a better job of promoting the dramatic amount of federally-assisted housing which houses people of all incomes, across the board. The department could potentially demonstrate the good housing that has been produced by the federal programs, and focus on that housing and the people who reside there. I think that story is beginning to come out; it came out dramatically in the preservation debate. But I think the department could help clarify that any real estate portfolio—including HUD's—with 1.5 million housing units, has a great deal of well located, well maintained housing. 

The tax credit program seems to be on the line again at the end of 1997. What is your assessment of the politics and probabilities of renewing tax credits?

I think it is fundamental that Congress renew the tax credit. I believe that it is important for Congress to hear not only how the program is efficient and has widespread support in the government and wide corporate community, but also how it has support in the nonprofit and resident community. I would stress that, if we learned anything in the campaign that prevailed on the preservation funding, it was to focus on the people. Against all odds, and the elimination of 36 HUD programs, preservation survived-precisely because we focused on the people. I think the tax credit program also helps people, and I think that should be highlighted. 

Last year, drawing on your experience as a former Bradley Deputy Mayor, we discussed proposals before the LA City Council to reorganize and consolidate the functions of community development, economic development and housing. How important is such a restructuring, given changes in the amount and nature of funding coming out of the federal government in the future?

I'm really too distant from the City to comment. But, if I were in charge, or had the responsibilities of Gary Squier of the LA Housing Department or John Molloy of the Community Redevelopment Agency, I would be very vigilant about watching what is happening in Washington D.C.

I think it is more likely that sources like Home and CBDG will be made more fundable than a block grant approach. It will be interesting to see if and how HUD moves the block grant programs next year. I would keep my eye on how Congress can cut back certain programs, i.e., elderly housing or preservation, leaving full funding of CDBG and HOME. If that occurs, the City will ultimately have to stretch its block grant dollars much further. 

Mayor Riordan recently vetoed a mixed use development project on 81st and Vermont. The project was backed by the City Council, and opposed by Maxine Water on the premise that commercial development, rather than housing, was needed on the area's boulevards. That is an issue that injects itself into all redevelopment in South Central Los Angeles. Do you have any thoughts about the proposition that it's housing versus commerce, and that the City has to choose between one or the other? 

I am unfamiliar with the issue, and I cannot comment on the particular case. It could be the Mayor was right, I don't know.

On a more general level, however, I think the debate between housing and commercial development is a dead-end for everyone. l really be­lieve that pitting housing versus busi­ness in a no-win for both sides. A more appropriate parameter would be the economic and neighborhood influences and outcomes that you want. Both or either housing and commerce can supply these outcomes. 

There is obviously a need for more commercial activity in South Los Angeles. There is also a need for jobs. I certainly hope that housing is not seen as a barrier to economic development. Housing can be a means to help stabilize neighborhoods, bring neighborhoods back, and help to anchor the neighborhood. 

Lastly, Michael, give us a sense about how the priorities of the National Housing Trust in Washington are being responded to on the Hill. 

As I implied earlier, we have had dramatic bipartisan support for the preservation program, evidenced this year. Together with a group of tenant and nonprofit and for profit advocates, we engaged in a successful education campaign that focused on the consequences of "vouchering out" decent housing, and the expense to the federal government of not conserving this unique housing resource. The program was ultimately supported by a large number of Congressmen, varying from Henry Hyde to the Congressional Black Caucus.