DR. BEN CARSON
SECRETARY OF
HOUSING AND URBAN DEVELOPMENT
AT THE
POLICY ADVISORY BOARD OF JOINT CENTER FOR HOUSING STUDIES OF HARVARD UNIVERSITY WINTER MEETING
WASHINGTON, DC

January 31, 2018


As prepared for delivery. The speaker may add or subtract comments during his presentation.

It is a pleasure to be here today. 

Astronomers are excited this morning because we had a lunar eclipse, a blue moon, and a super moon all at once—so I knew the heavens were aligned for a good speech today! Anyway, I will endeavor to do my best. 

It is an honor to be here with you today as part of the Joint Center for Housing Studies of Harvard University’s winter meeting.  Under the auspices of the Joint Center, and with your leadership, I am confident that this year’s meeting will lead to thoughtful research on the major housing policies issues of our time.

I would particularly like to recognize Carol Tomé, who is the Policy Advisory Board Chair and Chris Herbert, Managing Director of the Joint Center.  Dr. Herbert is no stranger to HUD and is always a welcome sight when he returns to headquarters.  We were very appreciative of his recent efforts to educate our senior leadership team on the Joint Center’s State of the Nation’s Housing Report.

And I thank all the other leaders of private enterprise for being here today. Your support of solid research, sound data, and evidence-based policy solutions and your continued interest in the wellbeing of the American housing market, are good things for us to have in common.

Last night, during his State of the Union address, the President detailed his commitment to building a safe, strong, and proud America. 

The President understands that our people are our greatest resource and that’s why he is focused on strengthening the economy.  Through the Tax Cuts and Jobs Act and his commitment to ending job-killing regulations, we are lifting all Americans, including those in HUD-assisted households. 

By increasing the opportunities for those most in need, we can provide a path to those who are dependent on HUD to graduate from government assistance and achieve self-sufficiency.

There are many reasons for the growing good cheer about our nation’s economy. Much of this is due to the President’s leadership, but it is also due to the innate optimism of the American people, especially investors and consumers, who sense that their government is again committed to fostering an atmosphere conducive to growing businesses and growing the economy.

Last week the Dow Jones hit 26,000 for the first time in history. The national unemployment rate is the lowest it’s been in 17 years, and millions of Americans are going to be able to keep more of their hard-earned money this year due to the enactment of the Tax Cuts and Jobs Act.

The recent tax reform package also maintained the Low-Income Housing Tax Credit and tax-exempt status for private activity bonds, which are especially valuable to those building America’s infrastructure, care facilities, and affordable housing developments. The Low-Income Housing Tax Credit is the most successful tool in producing affordable housing that we have ever seen.  Using the tax code to leverage private capital, it has produced more than 2.7 million affordable units to date.

The tax bill also authorized the creation of opportunity zones.  Simply put, if one sells an investment with an unrealized capital gain and reinvests the proceeds in a recognized opportunity zone, the capital gains tax can be deferred, or ultimately, reduced.  The zones are low income, designated by Census tract, and selected by Governors, who can select up to 25 percent of the economically distressed tracts in their respective states to benefit from this provision.  This could be a game changer for affordable housing, as more than $2 trillion in capital gains could be unlocked for investment in these zones.

With the economy taking off, we should not lose sight of how vitally important it is to develop more affordable housing.  The Joint Center’s recent 2017 report on America’s Rental Housing points out that nearly 21 million households pay more than 30 percent of their income towards rent.  Of those, 11 million households pay more than 50 percent and are defined by HUD as “severely burdened.”  HUD’s most recent homeless Point in Time Count, which took place in January 2017, revealed an uptick in homelessness that is, primarily, being driven by the lack of affordable housing in high-priced markets on the coasts.

But that does not mean that HUD should have a monopoly on the good ideas that it will take to solve this problem.  On the contrary, the people in this room, the Joint Center’s Policy Advisory Board, are essential partners in addressing this challenge.

The first and most important source of affordable housing will always be private enterprise—whether operating independently, or in cooperation with HUD and other government initiatives.

Many thinkers and politicians in the past saw how the activities of industry and finance could affect the lives of their countrymen. They saw the intersection of private interests and the common good, and had very different thoughts about that relationship.

Some thought that commerce had to be subject to government, managed and controlled, because government was the only entity capable of having a moral compass or improving lives.

But the idea of private enterprise vs. the public welfare has always been a false choice.

This administration does not consider private business as a rival to government, or somehow opposed to the best interests of the American people.

Instead, private business is the activity of the American people exercising their rights in a free economy.

And our government exists to protect those rights.

Therefore, when pursuing HUD’s mission to ensure safe, affordable housing for our fellow Americans, we cannot expect to achieve it by hindering those who are most responsible for creating it.

We only hurt our own goals by making it harder to make responsible loans. Harder to build housing. Harder to manufacture safe construction materials.

We all want to live in a society where it is easier to own a home, start a business, hire an employee, and get a job.

That was the purpose of President Trump’s Executive Order 13771 last January, which directed federal agencies to issue two deregulatory actions for each regulatory action. In fact, the Administration has cut nearly 22 regulations for every new regulation introduced. 

That Executive Order was followed by another executive order directing each agency to establish a Regulatory Review Task Force.  Our Task Force has been hard at work identifying any rules that may hurt job creation or impose costs that exceed their benefits—two things that undermine the very mission we work so hard to achieve.

I am pleased to share that last week we announced a top-to-bottom review of HUD’s manufactured housing rules, given the nation’s critical need for affordable housing. And for the next 30 days, we’re accepting public comments on current or planned regulations, to learn from the manufacturers affected by them.

We are also revisiting the America’s Affordable Communities Initiative to identify and incentivize the tearing-down of local regulations that serve as impediments to developing affordable housing stock. Out-of-date building codes, time-consuming approval processes, restrictive or exclusionary zoning ordinances, unnecessary fees or taxes, and excessive land development standards can all contribute to higher housing costs and production delays.

We must also ensure that families who depend on HUD have increased opportunities to participate in our economy and to build their own prosperity for themselves, both of which are critical to helping those who depend on HUD to reach self-sufficiency. 

Each of our policies and goals for 2018 has these two ideas at heart.

But our first challenge is to accurately understand the challenges we face.

Today, only one in four households which would otherwise qualify for rental assistance actually receives a housing subsidy. Although HUD funding has increased regularly over the years, the number of households served has essentially remained the same.

We must find another way—a better way—to provide a successful path to self-sufficiency and economic prosperity for HUD-assisted households, so we can better serve the other three-in-four households that are struggling to pay for the cost of housing.

Transitioning our aging public housing stock to a more sustainable platform is a critical part of this equation. The Rental Assistance Demonstration, or RAD program, continues to be one of our best tools to serve Americans more efficiently. RAD gives public housing authorities the ability to reinvest in public housing stock by shifting toward private investment and Section 8.

The program has produced over $5 billion in construction activity since it began, and stimulated job creation in many different areas of the country. It would have taken public housing authorities 46 years under current budget constraints to raise the funds to complete a similar level of construction.

Ensuring that the Federal Housing Administration’s Mutual Mortgage Insurance Fund meets its statutory capital reserve ratio is also critical to preserving access to affordable mortgage credit for first-time and low-to-moderate income homebuyers.  The fund ended the fiscal year at 2.09 percent, barely over the statutory requirement.  But, we did meet the goal, largely because of steps we took to defend the fund, the taxpayers that back it, and the prospective homebuyers that will need it.  We will continue to be good stewards of the fund going forward, and will manage its risk in a way that is transparent and accountable.

In addition, FHA must provide more clarity and certainty for those who facilitate its programs for millions of Americans. At the top of our agenda is modernizing FHA’s technology, which underpins all that FHA does, and is vital to the integrity of its operations and ability to protect taxpayers from losses. 

Further, one of the best things we can do to help creditworthy borrowers obtain mortgage credit is to provide certainty to the market.  We are working diligently to give lenders greater clarity, so they are not exposed to unreasonable liability by working with us in good faith.

In the long term, we are also committed to the Administration’s goal of housing finance reform.

The details have yet to be written, but because our fundamental housing mission, FHA mortgage insurance program, and Ginnie Mae mortgage-backed security guarantees are large and vital components of the housing finance system, HUD will be an active participant in this critical dialogue.  

We’re committed to giving future generations a well-functioning housing finance system that expands the role of the private sector and reduces taxpayer exposure. 

And of course, there are many other important issues that the dedicated men and women at HUD are working on every day.

We have a lot to tackle in the coming year: Continuing the fight to end homelessness, which, as noted, is intertwined with the lack of production of affordable housing. Protecting our veterans from abusive mortgage churning practices. Reforming HUD’s Rental Assistance programs so that they are sustainable and encourage work, self-sufficiency, family formation, and economic opportunity. Empowering Section III, so that jobs and training go hand-in-hand with HUD grants in local communities.  There is a critical shortage of labor in many areas of our country, and Section III can be a vital tool in our toolbox to not only develop communities, but develop human potential. 

And we’ll be breaking ground on Envision Centers across the country—hubs of innovation which leverage public/private partnerships to bring education, economic opportunities, and mentorship to our cities, leading more families to achieve self-sufficiency and enjoy their rightful share in the American Dream.

Lastly, I would be remiss if I did not touch on the ongoing disaster recovery efforts in Texas, Florida, Puerto Rico, and the Virgin Islands.  HUD plays the leading role in the entire federal government’s long-term housing recovery strategy.  Between my senior team and me, we have seen the devastation firsthand in all four areas and we are in regular communication with the Governors of the respective states and territories.  It is important to note that HUD does not rebuild anything itself.  We come up with the strategies and the policies, but ultimately it is our partners in the private sector that carry out the task of rebuilding, brick by brick, house by house, building by building.  HUD and federal taxpayers also have significant exposure in the mortgage market in the areas impacted by Hurricanes Harvey, Irma, and Maria, and we will be calling upon our private sector partners to advise on addressing these challenges as well. 

Each of these issues touches, and is touched by, the state of housing in America. And improvement in one area leads to improvement in all.

I know that many of your organizations are involved in amazing charitable activities, supporting many of the same communities we serve at HUD. For that, I thank you from the bottom of my heart. 

But as we venture forth into 2018, I am excited to help create the conditions where Americans and their businesses are empowered to take the lead on affordable housing, even in their day-to-day activities.

The endless capacity for innovation and cooperation in this country is our most precious natural resource, and at HUD, we look forward to using it with you—to fuel the future.

Thank you.