Dr. Ben Carson
Secretary of Housing and Urban Development
Western Governors Association Annual Meeting Remarks
Vail, Colorado, Hotel Talisa, June 12, 2019
As prepared for delivery. The speaker may add or subtract comments during his presentation.
Thank you, James [Ogsbury, Executive Director], for that warm introduction. And thank you to the gracious leadership of the Western Governors Association for inviting me to share my vision for HUD - especially as it pertains to our nation's great Western states - and how we are delivering results for the millions of people we proudly serve.
A Great Economic Revival is happening across America. There are record highs in employment, job creation, and GDP growth. Millions of Americans have been lifted off of food stamps; we have more job openings than jobless people for the first time on record; productivity is rising; and even manufacturing is coming back.
In the national economy, housing may be the most significant sector - not just because real estate is the largest segment by GDP, but because homes themselves are much more than mere physical structures - they are like the living nucleus of a cell that binds strong families, strong communities, and ultimately, a strong nation, together.
At HUD, our mission is to make sure all Americans have access to quality and affordable homes. We are delivering on this directive through initiatives that advance economic opportunity and help change the cost side of the equation for building new homes.
In the Western States, many small and rural communities have faced serious challenges over the years due to the persistent lack of financial investment into their localities. But this Administration has pledged that our nation's "forgotten men and women" will be forgotten no longer - so we are working to nurture neighborhoods that have long been neglected.
All Americans in need have the ability the succeed. What they need is the opportunity to put their God-given talents into action. But we can't wait for opportunities - we must create them.
Which leads me to the subject of Opportunity Zones.
Few programs in modern history have the power to uplift so many American spirits and prospects as Opportunity Zones - which governors have played an instrumental part in implementing.
As you know, Opportunity Zones are designed to spur private investments into economically distressed communities through powerful tax incentives. These incentives allow investors to defer and reduce their tax liability on capital gains by investing in new construction, rehabilitation, or businesses in designated low-income areas. In some cases, investors' capital gains tax can be reduced all the way down to zero, if they keep their capital in vulnerable communities for the long-term.
There are nearly 35 million Americans now living in the roughly 9,000 distressed areas currently designated as Opportunity Zones, which are comprised of urban, suburban and rural areas across all 50 states and five U.S. territories.
Many of these Opportunity Zones are in Indian Country as well. Governors in 26 states have named census tracts that include tribal areas. According to a report by the law firm Holland & Knight, more than 360 zones cross into tribal areas. That number is even higher if you include zones adjacent to tribal areas.
Despite a highly competitive selection pool among other distressed regions of America, roughly 38 percent of tribal entities are represented in Opportunity Zones. During my travels across the American West, I visited reservations and met with tribal leaders in New Mexico and Montana. Many of these leaders worked with their governors' offices to promote the inclusion of tribal areas. And they did a great job.
The total pool of eligible funds for Opportunity Zones - when you add up all the capital gains by individuals and corporations across the country - is $2.3 trillion dollars.
At their outset, Treasury Secretary Steven Mnuchin predicted that $100 billion [dollars] in private investment would be directed to local communities across the nation in Opportunity Zones. This quantity of untapped capital could drive a Rural Renaissance into the Western States.
Some pundits thought that forecast was overly optimistic, but like so many other milestones surpassed by this Administration, we're already closing in on that figure fast. For example, the National Council of State Housing Agencies announced last month that its Opportunity Zone Fund Directory had expanded to nearly $29 billion dollars in anticipated investments. Of those $29 billion dollars, 91 percent of funds plan to invest in multifamily residential, student housing, mixed-use, hospitality, or other commercial developments. And nearly 60 percent of funds plan to invest in affordable and workforce housing or community revitalization.
We are also seeing countless positive reports from local public officials that anticipated investments in Opportunity Zones are stoking economic development into their neighborhoods. Cities across the country are developing Opportunity Zone investment prospectuses to attract private business - these hubs include: Louisville, Kentucky; Oklahoma City, Oklahoma; South Bend, Indiana; and Stockton, California.
As for direct impact, growth in acquisitions of developable sites in Opportunity Zones surged in 2018 compared to the rest of the country. According to Zillow, property sale prices in Opportunity Zones have appreciated at a rate of more than 20 percent, double the appreciation rate for eligible but not selected areas.
Recently, I was in an Opportunity Zone in St. Louis, and an abandoned factory was serving as the nexus for an amazing, comprehensive revitalization. They are building grocery stores, workforce housing, and training facilities. Even better: the governor was there, (a Republican); the mayor was there, (a Democrat) - isn't that something - they were actually working together.
The whole concept of bitter partisan divides where people have to pick sides really has no place in America. It's time to end class warfare and embrace our common welfare.
To ensure Opportunity Zones reach their full potential, last December, President Trump established the White House Opportunity and Revitalization Council, which I have the privilege to chair. The Revitalization Council - which consists of members from 16 federal agencies and federal-state partnerships - has a mission to make better use of public funds in the revitalization of economically distressed communities.
As of now, the Council has identified more than 160 programs that could increase targeting to Opportunity Zones through grant preference points, loan qualifications, reduced fees, and eligibility criteria modifications. We have already implemented 50 of these actions across agencies.
The Revitalization Council is also conducting a listening tour of Opportunity Zones throughout the nation to incorporate input from community leaders, entrepreneurs, and investors - including in many rural areas targeting new development. We are fighting hard to make sure the voices of the Western States - and not Washington officials - are fully heard.
Many of our country's bravest men and women of the U.S. military come from the American West. These soldiers dedicate their lives to protecting our freedoms - and some struggle financially when they return to civilian life. In turn, the challenges of veteran homelessness often fall disproportionately on the Western States from which they hail.
In my time as HUD Secretary, I have seen the streets of "Skid Row" in Los Angeles, and walked through shelters for veterans facing hardship - it is tragic situation that no proud country can allow to go on, except as a rare, brief and one-time experience.
Fortunately, HUD has been making tremendous strides toward increasing the availability of homes for our nation's heroes. Nationwide, the total number of reported homeless veterans decreased by more than five percent last year, and has decreased by roughly half since 2010 - prompting 71 communities across 33 different states to declare an effective end to veteran homelessness in their areas. Three states have declared an effective end to veteran homelessness altogether, which means that more veterans are securing more affordable and higher quality homes.
Each year, HUD is proud to serve more than a million people through emergency shelter, transitional, and permanent housing programs. With rents rising faster than incomes in many parts of the country, however, we need to bring everybody to the table to produce more affordable housing and ease the pressure that still is forcing too many of our country's servicemen and women out of the housing market. This is not solely a federal problem - it's everybody's problem, one that we need to work together to solve.
Innovation; Affordable Housing; Disaster Recovery
Although the American economy has taken off like a rocket, there are still too many citizens who feel left behind. For many millennials, the housing market has become a lost dream. Many nurses, teachers, firefighters and police officers struggle to live in or around they communities they serve each day.
If "necessity is the mother of invention," America's affordable housing challenges have created the impetus for a powerful wave of American ingenuity - in the form an amazing array of new home building technologies, techniques and materials.
One such innovation is the dramatic rise of manufactured housing as a builder of more affordable and resilient homes.
Today, more than 20 million Americans live in manufactured housing, which makes up approximately 10 percent of single-family residences. As a result, manufactured housing has become the largest source of unsubsidized affordable homes in the nation -which saves taxpayer dollars.
With manufactured housing, construction can be done at half the cost, while appreciating in value at a rate similar to site-built homes, according to the Federal Housing Finance Agency Housing Price Index. These dramatic cost savings enable responsible citizens to secure housing that may be considerably less expensive than renting or purchasing a site-built home.
Time and again, it has been shown that homeownership is the most powerful tool for wealth creation in our country. According to the National Association of Realtors, the average net worth of a renter is $5,000 dollars. The average net worth of a homeowner is $200,000 dollars. That's a 40-fold difference. By harnessing these new technologies, we can increase production of new homes nationwide, while preserving homeownership's extraordinary potential to be a wealth creation tool for families from every socioeconomic background.
While home affordability is a challenge that touches every family, natural disasters remain a persist threat that can decimate local communities and their way of life. Just two weeks ago, at least 53 tornados ripped through eight states in the American West, stretching from Idaho to Colorado.
Natural disasters do not just devastate housing capital - they devastate human capital, through lives interrupted, school days missed, and communities fragmented under strain. To address this damage, last year, HUD allocated more than $35 billion [dollars] in funding to 16 state and local governments, helping America's hardest hit regions. These grants represented the largest single amount of disaster recovery assistance in HUD's history.
Technological innovations such as manufactured homes can help mitigate these harms through the use of environmentally resilient construction materials, as well as by providing an affordable and permanent housing solution for lower-income survivors.
For example, on a recent visit to Alabama, I was shown a site that was demolished by massive tornadoes - and the only homes in the area that successfully weathered the storm were manufactured houses. It was a testament to their resilience, befitting the silent strength of the American spirit.
The American West is becoming a hub of innovation for new housing technologies. I was recently at a site in Austin, Texas where they were building homes with 3D printers. And a number of exhibitors at HUD's inaugural Innovative Housing Showcase on the National Mall earlier this month hailed from out West. Next year I would love to have all of you join HUD on the National Mall so you can see the latest and greatest from America's innovative homebuilding entrepreneurs.
At our Showcase, we featured state-of-the-art building technologies and housing solutions that make homeownership more affordable for American families, and homes more resilient during natural disasters. We helped educate policymakers - and tens of thousands of Americans - through a wide array of exhibitions, prototype homes, panel discussions and policy conversations with leaders across the housing industry.
Among other new kinds of prototypes on display, we had three fully-built manufactured homes sitting right next to the Washington Monument for people to explore and enjoy.
This Showcase lasted for five days to kick off National Homeownership Month, and I saw countless young couples - millennials - walking about the Mall, hand-in-hand, planning their futures. You could hear the excitement of a new generation of Americans, coming together around a vision they could feel with their own fingers, becoming inspired to join the American tradition of sustainable homeownership.
One of the key takeaways from the Showcase was that technology is a fantastic tool for building unity. Technology has no color, no creed, no picket line, and no party line. It's not Democrat, and it's not Republican - it's just plain American.
Nothing can - and nothing will - stop these United States as long as we stay United.
In the State of the Union Address, President Trump remarked: "Across this magnificent republic, we come from the rocky shores of Maine and the volcanic peaks of Hawaii; from the snowy woods of Wisconsin and the red deserts of Arizona; from the green farms of Kentucky and the golden beaches of California." When you stop and think about it, the geographic diversity of this nation is unlike anything on earth, and yet we all come together and sing "The Star-Spangled Banner" under a common flag.
I'd like to once again thank the Western Governors for inviting me to be with you today, and for being visionaries in your stewardship of the public interest. A visionary is someone who gives people the ability to see the invisible - and if you can see the invisible, you can achieve the impossible. I believe there is nothing impossible about making economic opportunity, affordable housing - and indeed, the American Dream - a reality for the millions of great men and women who call our country home.
I look forward to continuing to work by your side to fight for that future together.