September 30, 1994 - From the September, 1994 issue

A HUD Policy Perspective from Cisneros’ Special Ass’t Marc Weiss

One of the cornerstones of the Clinton Administration's domestic policy agenda is the revitalization of urban communities. All integral part of that strategy is "reinventing" the U.S. Department of Housing and Urban Development (HUD). TPR presents an extensive interview with Dr. Marc A. Weiss, Special Assistant to HUD Secretary Henry Cisneros, on the status of HUD's transformation including Empowerment Zones, the Housing Choice and Community Investment Act of 1994 and the expansion of federal homeless programs. 

Share with our readers the politics, obstacles, and the degree of difficulty in reinventing HUD? 

Changing rules and regulations requires going through the whole bureaucratic procedure. In order to change laws, you have to go through Congress, which we discovered is a slow and cumbersome process. It's hard to reinvent HUD without reinventing the entire federal government. 

In terms of reinventing the way HUD does business, you have to deal with personnel practices, employee relations and all those related issues. For example, we tried to eliminate all the regional offices as part of a reorganization of HUD itself. At almost every turn, we learned that it takes longer and is more complicated than we imagined. 

Why should the private sector care about reinventing HUD? What is at stake for them in this debate?

There are two answers to that question. First, there are things that directly affect them, such as Section 8, FHA, and all the other programs we have for rental and home ownership housing. We are talking about a huge presidential initiative that will be an important partnership with the private sector to achieve all-time high levels of home ownership in the United States. It's a nationwide initiative that will affect the suburbs as well as the inner-cities, and all ethnic and socioeconomic levels from middle-income to low-income. 

One important point is that we've been trying to raise the FHA loan limit, which could make a big difference in California, in terms of reinventing FHA, making it more user-friendly. 

The other important point is that the homeless and the poor affect all of us. I was visiting Congress yesterday on the Crime Bill. Why are we spending $30 billion on a Crime Bill? Because we have a tremendous societal problem, and if we are going to be safe, healthy, and more economically productive, it means confronting basic problems such as lack of education and productivity among many potential members of the workforce, crime and drugs, problems that don't just affect our cities but reach into middle-class suburbia and all segments of American life. 

We must address these issues and that is why HUD and Secretary Cisneros is charged with the mission of improving urban America. These are issues that the private sector, as well as most Americans should and do care about. 

Could you go into more detail about some of HUD's new initiatives? 

There was a hearing in Denver recently regarding the creation of the first consolidated regional processing center to streamline FHA service. We are also looking at extending the loan limits to include a wider group of people that need help with a low down payment for a mortgage. That's a proposal we have in Congress which is still working its way through the process as part of our reauthorization bill for 1994, the Housing Choice and Community Investment Act. 

Regarding rent reform, many people believe that Section 8 regulations discourage recipients from seeking employment, because the additional income will go directly to higher rent, how is HUD addressing this problem?

From day one, Secretary Cisneros has proposed reforming the rent regulations in public housing on two counts. If someone is unemployed and they get a new job, they pay no rent increase for eighteen months. This is a tremendous work incentive for people to get off welfare. After the eighteen months, rent is gradually phased in to the 30 percent level. This proposal is part of our 1994 legislation. 

The other part of our proposal is what is called ceiling rents, which basically attempts to break the connection between rent and income. In HUD's Section 8 program, an owner can't charge more than market rent, and people don't pay more than 30 percent of their income on rent. In public housing there is no maximum rent. Thus, it is possible for someone in public housing to pay more rent than the current market rate for a private apartment. So one of the proposals we have is called ceiling rents, where regardless of the residents' income, they would pay no more than fair market rate. Their rent does not keep going up. These are two of our major rent reform proposals. 

What is the nature of HUD's interface with local governments and metropolitan areas like Los Angeles? What are local jurisdictions asking for? 

We've done an extensive, consolidated planning effort with the major block grant programs including the Community Development Block Grant (CDBG) program, the HOME program, and a proposed new homeless grant combining many of the McKinney programs. Rather than the local jurisdiction doing a separate plan for each grant program, they would combine them to streamline the process so local governments can do broader long-range planning. That's not only on a jurisdictional level, but on a metropolitan level as well, to encourage thinking about fair housing, planning, community development and homeless prevention on a regional and metropolitan level. Secretary Cisneros has also launched a national dialogue on metropolitan issues to look at what more can be done to bring together cities and surrounding communities. I worked with the Secretary on a conference called "Interwoven Destinies Cities and the Nation" to begin the dialogue on some of these metropolitan issues.

What is the status of the Empowerment Zone/Enterprise Communities applications? 

HUD is the lead agency for the urban Empowerment Zone/Enterprise Communities (EZ/EC), while the Department of Agriculture is the lead agency for the rural EZ/EC applications. The final decisions for the EZ/EC designations are likely to be made in September or October. 

One of HUD's initial hopes has already been realized, and that is the massive amount of community participation in the planning process for the EZ/EC applications. It's been extremely gratifying, there's been more participation than we expected, which means communities are really embracing the process and are hitting the ground running. That is the real story of the empowerment zones program. There is also some discussion of having a second round of EZ/EC designations, possibly based on metropolitan zones, due to the excellent response. 

A few months ago, there was a critical review of the EZ/EC program in the New York Times, describing the Empowerment Zone strategy as a rehash of Great Society programs that have failed to meet our noble expectations. What are your responses to such criticism? 

That article was tremendously biased. It pointed out one obvious point that we totally agree with, which is you cannot take a low-income neighborhood and make it economically self-sustaining in isolation. In other words, you can't focus exclusively on a neighborhood, and then in that neighborhood create all the jobs needed to deal with all of its economic and social needs. That is not the point. Rather, the point is to find ways to improve the community environment and to link those communities more effectively with the broader metropolitan area's job and labor market 


As the economy grows across the board, people in low-income commu­nities will have better opportunities, and in turn, encourage residential and commercial investment As the metropolitan area grows, these communities also grow, and while some people might move out, some will stay to invest in businesses and housing in the area.

On a related topic, there is a perception at the local level that public housing, as presently regulated, doesn't work, and with the exception of communities with poor administrative records, all the regulations governing public housing should be thrown out in order to start from scratch. What's your reaction? 

I think the Secretary would agree with some of that, but I don't think he can go to the extent of throwing out all regulations. We have been working actively to change regulations that hinder important goals in public housing such as changing the rent rules, site and neighborhood standards, mixed population of elderly and disabled, and many more. There has been a tremendous amount of activity working with local governments and communities to make the necessary changes and de­regulate wherever possible. 

In regard to public housing, we are deregulating "high performers" meaning the agencies that are more effective, we are giving them greater flexibility. We also have the HOPE 6 initiative, a billion dollars to completely redo thirty-four public housing projects, which is tied very closely to deregulation and more flexible innovative approaches. 

Homelessness has traditionally been viewed as a housing supply problem, but some revisionist theories suggest homelessness is a problem primarily associated with the mentally ill and substance abusers, and gets mislabeled as a housing problem. Although HUD has recognized this, how is such a view reflected in HUD policies and programs? 

Secretary Cisneros and Andrew Cuomo, who has been doing transitional housing for more than half a decade in New York, are both very aware of this problem. HUD has developed the Continuum of Care approach and an Innovative Homeless Fund for city-based initiatives including Los Angeles as one of the cities. We recognize that as many as two-thirds of the homeless population need more than just housing and income, they need some level of supportive services due to either physical or mental disabilities or substance abuse. Under our legislative proposal to consolidate the McKinney Act programs, the idea is to have much more flexibility for the local governments to put together housing and services. That has been the major thrust of what HUD has been doing for the last year and a half. 

What are you most proud of and what should people expect in the near future to emerge from HUD's Housing Choice and Community Investment Act of 1994 legislative package? 

In the area of homelessness, we have a new emphasis on the continuum of care, moving beyond emergency shelter to a whole system of getting people off the streets through transitional housing and services, and into permanent housing, jobs and services for better lives. 

In public housing, we developed a whole new approach to community building, working to physically tear down bad public housing projects, especially the high-rises, to rebuild on-site with better low-rise housing, to spread housing throughout the metropolitan area with mixed public/private housing, and to expand the possibilities for people with Section 8 vouchers to move into places throughout the metropolitan area 

Regarding our homeownership initiatives, we are promoting large-scale urban home ownership in low-income communities through the National Homeownership Fund, as well as broader initiatives which would make home ownership more relevant and effective for everyone —middle-income, minorities — across the board growth. We are also working on pension fund investment in affordable multi-family housing, which is going into its second legislative round, including pension funds for the AFL-CIO Housing Investment Trust, the California Public Employees Retirement System (CALPERS) and several othor pension funds in California and across the country. 

In terms of fair housing, we are working on an aggressive new program to deal with mortgage discrimination and insurance redlining, and to encourage more grassroots participation and a metropolitan focus. Also, we are expanding counseling programs for people receiving Section 8 vouchers so they can move to a wider range of communities. 

Finally, regarding community planning, in addition to our extensive Empowerment Zones program, which includes HUD grants for physical improvements, we have increased funding for more community-based activities through the National Community Development Initiative and our proposed Community Viability Fund. We also proposed a new special grant program for urban neighborhood economic development projects to create jobs and services, Neighborhood LIFT. These are all important new programs. 

We're almost at the half way point of President Clinton's first term. As Special Assistant to Secretary Cisneros, what would you like to see happen before the 1996 election? 

One of the things we would like to see is a lot of results from our new initiatives. It's like steering a battleship; we've turned the wheel 180 degrees and now we would like to see some real movement and change. The Secretary has emphasized five priorities: 1) reducing homelessness; 2) transforming public housing communities; 3) expanding affordable housing and home ownership; 4) opening housing markets through fair housing and lending; and 5) empowering communities. In each of those areas, Secretary Cisneros is going to continue to make a great deal of progress in these new directions — real results for real people. 

Also, we are working on metropolitan issues of economic integration and breaking down the racial divide as well as the spatial divide between cities and suburbs. 

Lastly, if you were lo return today to the Columbia University faculty, and put together your fall national housing policy course syllabus, how would it be different, based on your two years as special assistant to Secretary Cisneros? 

I think what would be different is a much more realistic understanding of what Washington and the Federal government is like, and how difficulties to make change. It's more than just coming up with policies, it's getting them adopted and implemented which often is very different from the theoretical logic of academia. 

I think that I could give people a much better picture of what it really takes to do urban policy at a national level. It takes a massive amount of broad-based political support at the grass roots level from the private sector, investment community, local governments, elected officials and community organizations, to make implementation possible and successful. 


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