70th Annual Conference of Mayors

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70TH ANNUAL CONFERENCE OF MAYORS
Madison, Wisconsin
Remarks as prepared for delivery by
Secretary Mel Martinez
SATURDAY, JUNE 15, 2002

Thank you, Mayor Menino, for your very kind introduction, and for bringing the nation's mayors together on the issue of housing. Your concern and leadership are appreciated and recognized.

I am honored to be here, and to have this opportunity to meet with America's mayors. Congratulations to all of you being recognized today with the 23rd Annual City Livability Award. This is a wonderful opportunity to showcase the contributions of mayors and city governments.

I appreciate the difficulties our mayors face as you seek answers to the challenges of transportation, schools, economic development, housing, and now, homeland security.

Even as we meet to focus on housing concerns, the issue of homeland security is never far from our thoughts. There is nothing more important to President Bush and this Administration than protecting the American people. The President's announcement last week that he would ask Congress to create a new Department of Homeland Security is a bold move to help meet the threat to our security.

This new department means that someone will be waking up every day in Washington focused on keeping our citizens safe. You, of all people, know how important the issues of public safety are to the well being of a community.

Governor Ridge will brief you on the President's plan in detail on Monday. I just want to say that the Administration recognizes that our cities have had to respond to new threats and take on new responsibilities since September 11th.

We also appreciate the attention that your organization - under the leadership of Mayor Menino and others - is giving to housing. I was glad to have the opportunity three weeks ago to address the Mayors National Housing Forum in Washington. The recommendations you provided through your "National Housing Agenda" reflect many concerns that we all share.

Today, I want to focus on an issue that is a top priority of this Administration: the need to increase homeownership in this country, especially among minority families.

For the first time, a President has proclaimed June as National Homeownership Month. This is our opportunity to highlight the many ways in which the federal government is helping to make homeownership a reality for more families. The President was speaking to this commitment in his Homeownership Month proclamation, when he wrote, "…We are helping thousands of Americans buy homes and pursue a better quality of life."

On Monday, the President will be addressing the issues of homeownership and housing. He will be challenging real estate industry leaders to join with the government, non-profit organizations, and private-sector financial institutions in a major nationwide effort to increase minority homeownership.

Just this morning, President Bush dedicated his entire national radio address to the subject of homeownership. As the President said in his remarks, "By broadening homeownership, we will help dreams come true in America."

As I have visited your cities, you have told me over and over about the power of homeownership to transform both families and communities.

Homeownership generates wealth for families and provides financial security in the form of an asset that can be passed from one generation to the next.

Homeownership promotes strong neighborhoods by creating community stakeholders who coach the ball team, work in their schools, and join neighborhood crime prevention groups.

Homeownership helps to strengthen families and provide stability for children.

This emphasis on homeownership has had a pronounced and positive effect on the economy as a whole. The evidence before last week was anecdotal, but a new report released by the Homeownership Alliance confirms what many of us have been saying: that housing was the glue that held the nation's economy together during the recent slowdown.

Housing contributed 40 percent to the growth of the economy in 2001, nearly twice its usual rate. In many cities, the local economy would have actually contracted had it not been for the strength of the housing market.

During the last week of May, applications for mortgages to purchase a home reached a record high. The market has been sparked in part by the lowest interest rates in 30 years. For now, it looks like mortgage rates will continue their downward trend - and if that holds, we could see the number of homeowners climb even higher.

The nation's economy has benefited in the past - and benefits today - because we are a nation of homeowners. Through homeownership, a family develops stability and creates wealth. Through homeownership, we empower our fellow citizens to take control of their own lives.

The President believes - and I believe it wholeheartedly - that we can best help our fellow citizens by empowering them to take charge of their own lives. Government cannot solve every problem, but it can encourage people and communities to help themselves and one another. Compassionate conservatism means giving someone the assistance and the tools that it takes for them to lift themselves up and begin a life of independence - in other words, helping citizens build better lives of their own.

I can think of no better way to empower families or individuals than by making them homeowners. And when more citizens own their own homes, and contribute to their neighborhoods, and care about their neighbors, your communities will benefit in ways we cannot even imagine.

We have had great success in this country in building the ranks of homeowners. Homeownership hit a record high last year: 67.8 percent. Homeownership among Hispanics, African-Americans, and Asian Americans hit record levels, too.

These results are something to celebrate. But nevertheless, more work remains. Minority families own far fewer homes of their own than non-minority families do. Across the board, minority homeownership is about 20 percentage points below the rate for the population as a whole.

The federal government can play a more active role in expanding the ranks of homeowners by removing the barriers of high downpayments, a homebuying process that is both complicated and costly, and a lack of information about how to become a homeowner and obtain the necessary financing.

First…we can help low-income families who qualify in every other way for a home, but who cannot come up with enough cash to afford the down payment and closing costs.

One of our solutions is the American Dream Downpayment Fund proposed by President Bush. Each year, the Fund will help 40,000 first-time, low-income homebuyers purchase a home of their own.

The Section 8 homeownership program is another innovative solution to help low-income families make the move into homeownership. The expansion proposed by the President would allow families to put up to a year's worth of their rental vouchers toward a home down payment.

We are creating incentives to encourage local public housing authorities to embrace the Section 8 homeownership program. I hope that you will bring this message back home and encourage your PHAs to participate. Already, we have helped some 300 families purchase homes, the majority of them in just the past six months.

Second…we can simplify the homebuying process and make it less costly for consumers. I want buyers to have full, upfront disclosure of their settlement fees - and have the opportunity to shop for the best mortgage to meet their needs, at the best cost.

Third…the lack of information about homeownership opportunities prevents too many potential buyers from owning a home. Education is key. Consumers who understand the homebuying process are more likely to buy a home they are happy with and less likely to be victimized by predatory lending practices.

This is particularly important for immigrant Americans. Immigrants are oftentimes not familiar with our homebuying process and the opportunity for long-term financing.

Therefore, housing counseling is an invaluable tool for prospective homebuyers. The Administration plans to make counseling a separate program with a 75 percent funding increase.

Fourth…we can offer new tools that encourage housing construction. The federal government provides incentives to produce new and rehabilitated affordable rental housing through the Low-Income Housing Tax Credit. It works so well that this year, President Bush has proposed a similar initiative that would offer tax credits for single-family home construction.

Fifth… we can extend the reach of housing programs that are having a proven, dramatic impact in people's lives. For example, we are tripling funding for the SHOP program, which supports organizations like Habitat for Humanity.

The issue of housing affordability continues to be a challenge in many of your cities.

As I mentioned, the Low-Income Housing Tax Credit is one of the major programs through which the federal government encourages affordable rental housing construction. The tax credit was expanded by 40 percent last year, which should increase the number of units it supports to more than 100,000 annually.

Both the HOME program and HUD's Community Development Block Grants play key roles in addressing the lack of affordable rental housing. More than half of the dollars provided in grants to states and localities through HOME go to support rentals. And many cities use the flexibility of CDBG to address affordable rental housing needs in their communities.

HUD has three major rental assistance programs that collectively provide subsidies to more than four million households nationwide: public housing, the project-based Section 8 program, and the Section 8 voucher program. I want to focus specifically on the voucher program.

The housing voucher program helps nearly 2 million families afford decent rental housing. Half of these people are living in our cities, by their own choice.

The latest numbers from the Census Bureau show that for the past year, the rental housing vacancy rate has been rising, and today it stands at 9.1 percent. That means one of every 11 rental housing units in America is vacant - the highest vacancy rate since the Census Bureau started collecting this information back in 1965.

At the same time, the number of vacant rental units affordable to people with a housing voucher is rising. It is now over 2 million nationally.

These statistics tell me that we have a real opportunity to strengthen the voucher program. We want to help our mayors make vouchers work better in your cities - to match families that need affordable rental homes with empty and waiting apartments.

Another issue I know you face is the issue of homelessness. HUD is undertaking a major initiative dedicated to helping homeless Americans get the care and shelter they need. And I have issued a challenge that we end chronic homelessness within the next ten years.

We awarded a record $1 billion this year to fund homeless assistance programs. Our commitment will increase next year, through $1.1 billion in funding the Administration has proposed. HUD is doubling funding for the Interagency Council on the Homeless, which President Bush reactivated to better coordinate the work of the many federal agencies that provide funding for homeless services. Phil Mangano serves as Council director. Phil came to us from the Massachusetts Housing and Shelter Alliance, and we are glad to have him on the team.

The three agencies most heavily involved in funding homeless assistance programs - HUD, HHS, and VA - have formed a task force that meets to share information.

Solving the challenge of homelessness will require the combined resources of government on the federal, state and local levels, and the many community based organizations that partner with us. But I am confident that we have the resources needed to do the job.

With all of the work ahead of us, and all of the families who are depending on us, I ask that we work together to resolve the housing challenges in a spirit of bipartisan cooperation.

We have a moment of opportunity before us. I have received with interest the recommendations you provided through your "National Housing Agenda." The Millennial Housing Commission has just issued its own recommendations, after a lengthy time of study. Many around the country are coalescing around the issue of housing affordability in America.

While I have said previously that local governments have the most critical role in housing, I look forward to working together to seek solutions to this difficult problem. But I have the greatest faith that some of the best solutions will be those you come up with, because our cities are the best laboratories of innovation in this country.

America's cities have always risen to the challenges presented by the times, so I have no doubt that our cities will meet the housing challenges ahead. HUD is proud to work with you. We look forward to strengthening our communities in the coming years through the dedication we share to affordable housing - and to every American family looking for a home.

Thank you.