Wendy Greuel On Reinventing HUD & LA Community Development Bank

As the point person for HUD in Southern California, share with readers some of the high profile issues that HUD has been involved with in the region, such as our recovery from natural disasters. 

HUD played a new and more active role in earthquake recovery in Los Angeles. The Secretary came to Los Angeles the day of the earthquake, and was visible in his effort to reach out to people affected by the earthquake and the problems they were having in securing assistance from FEMA, the lead organization for any sort of natural disaster. We found that a number of the people living in parks were very low income, and could not easily take advantage of a guaranteed two-month rental assistance program from FEMA to actually rent an apartment. The families either had bad credit, did not speak the language, or perhaps were victims of rental discrimination. 

Secretary liaisons wanted to immediately place people into housing in a way that would stabilize their lives; we consequently looked to housing certificates. There was some precedent to utilize emergency certificates with the hurricane in Florida; however in Florida, HUD's certificates were available three months later in the process. One of our first actions here in Los Angeles was to handout approximately 22,000 housing certificates. 

A housing certificate allowed individuals to pay 30 percent of their income for housing, with the government subsidizing the remaining rent for an 18-month period. We did have some difficulty initially in getting apartment owners to accept the certificates, since they were not familiar with the government programs and were apprehensive about getting involved. 

We also set up an innovative "mobility plus" program which utilized non­profit homeless providers who helped homeless families locate housing with other section 8 certificates. This program has proven very helpful because the non-profits knew how to deal with low-income populations, were familiar with the Section 8 program, and had an established relationship with the homeless in the area. They were very helpful in transporting families to an available apartment and helping them negotiate a lease. We knew from day one that 18 months later we were going to continue to have to deal with recipients who needed additional help to stabilize their lives. The hope was that as many as possible would stabilize and would no longer need these incentives. What we found is that a number of recipients have begun to find employment and moved to permanent housing, but will still have a major task ahead of them. Many of the families we assisted were living doubled-or tripled-up before the earthquake. With the emergency certificates, they were able to move into decent quality housing, and it is hard to go back to the same housing situation. 

The mobility plus teams are now contacting each of these families, and working with them to see what they can afford and when they will be able to move to permanent housing. We are also looking at policy for those, such as the elderly, who may never have enough income to go back to their previous housing. HUD recently announced that no housing certificates will expire prior to the end of the year. We had $200million worth of funds made available under the supplemental bill which allows us to extend the certificates through the end of the year to allow people to stabilize. A majority of the certificates were scheduled to expire in September and October. 

In addition, we will pay special attention to the elderly and disabled, about 11 percent of the certificate holders, and consider options for these special cases. In the next few months we are going to ask the housing authorities to examine each family's situation with the mobility teams and determine those that have extenuating circumstances. 

While HUD's emergency relief interventions have been appropriately lauded, the question before the 104th Congress remains how and with what programs and resources the federal government should address housing. How do you foresee the congressional debate over the recissions and the budget for HUD being resolved?

If you had asked us a few months ago, we might have had a more negative attitude about the future. However, you've seen in the last month or so that HUD is not on the chopping block as far as the agency is concerned. Secretary Cisneros and the leadership at HUD made some important decisions at the end of last year about how to speed up the already planned reorganization and reinvention of the agency. There is a need for an agency such as HUD, which really speaks for those in the population who do not have a voice in the decision-making process on the issues of housing or other forms of community development assistance. Although the decisions haven't been made yet, the future looks brighter. However, the other side of the coin is that we don't know how much of HUD's budget will be cut. 

In the April issue of TPR, Mark Fabiani is quoted as saying, "HUD would be better off bad we begun to reinvent the agency two years ago. Unfortunately much of what happened at HUD in the first two years amounted to tinkering around the edge—major changes in public housing and FHA weren't forthcoming." How would you respond to Mark's assertion?

I believe in any new administration it takes time to review the history of what has happened at the department, what is wrong, and how to make acceptable changes to improve the operation of the department. There was an immediate interest in making major changes, but the wheels of government move very slowly. Mark's comments are accurate in the sense that had we been able to do this a year ago, we might be adding different issues now. However, it is critical to note that these changes might not have been accepted from the constituencies HUD serves. 

Even now, we are working closely with constituents to implement reinvention. When Secretary Cisneros was here in Los Angeles in April, he discussed the reinvention. He indicated that the proposal was evolving, and he wanted input as we move forward with the reinvention. I believe our constituencies understood that we needed to make some proactive changes and difficult decisions. So now we're all at the table; discussions are heated at times, but most of the time we're sitting together and talking about HUD's future. 

Let's move to another issue in which you're involved—the LA Community Development Bank. What is the status of the bank, and what are the prospects for the bank? 

We were very pleased with the concept of a community development bank, proposed by Los Angeles. It will be a model for the rest of the nation. Vice President Gore was here in May and was able to announce the Administration's approval of LA's application for $430 million—$125 million in grant money and the remainder in Section 108 loan grants. Additional private institutions—Bank of America, First Interstate, Union Bank, and Wells Fargo have committed $210 million to work with the Bank. 

LA came together after they were selected as a supplemental empowerment zone. We spent last week with four other cities in the country who also received economic development initiative funds and Section 108 Loan Guarantees. I have to compliment LA; they have made major strides in the development of the bank in comparison to some of the other cities. The other cities are beginning to struggle with some of the same issues Los Angeles has faced, particularly governance, and how the funds are allocated. 

What is the latest consensus within the City on the governance of the bank and its funding and lending objectives? 

There has been a lot of discussion concerning the independence of the bank. What we've seen in community development banks across the country that worked is an entity that made decisions based not only on the needs of the community but also on the merits of the loan. The bank must have the ability to take risks, but at the same time be able to be financially independent.

Concerning the governance structure, they are really struggling with the appointment process. I believe everyone has agreed on 15 members, and to have representatives from the community and from banking. At least 5 of the board members will be from the community. Again, the issue is who appoints the board. 

At the heart of this decision is the issue of the bank being independent, yet representative of the community. During this process, they have tried to balance the need to inform the public and be independent.

In terms of how the money will be spent, a comprehensive agreement between the City, County and the Bank will include information that makes the Mayor and Council comfortable on board policy issues. The agreement will determine how much will be spent on venture capital, loans, grants, on technical assistance, etc. The agreement will also specifically outline the financial structure and the lending criteria. 

Gil Ray, Ed Carson, and Rudy Estrada arc initially negotiating for the Bank in finalizing the comprehensive agreement 

Let's talk about HUD and the 104th Congress. Obviously the trend in Congress is toward the devolution of money and responsibility from the federal to state to local level. You've been in local government. As money and authority move to the local level, what changes in priorities and service delivery do you foresee? 

I am most familiar with the homeless funds and community development block grants. Local control is very desirable for the City. Elected officials are often able to look at the big picture. They are able to look at the various sources of public and private funds and see where the gaps are, and  then determine local priorities. One of the most frustrating things for me when I worked for local government was that decisions were made in Washington and they had no understanding of what particular local governments needed. Many times, for example, homeless providers would apply to HUD for funding, and HUD would score them on whether they had a great grant writer. But, if you were trying to develop a comprehensive approach to homelessness local agencies might indicate that this provider is unwilling to work with any other agencies, and is not part of a continuum of care. Decisions would come down from Washington, while locally, people would scratch their head because it didn't make sense for Los Angeles.

Secretary Cisneros has tried to address this issue with the recent Super­NOFA we sent out, which required that local non-profit agencies work together to submit an application. Difficult as that is, they really pulled together here in Los Angeles and made one application for the homeless programs. If I put my non-profit hat on, the concern with local control is that if I'm not well-connected, or if I don't work with the right non-profit, I may not get funded because I'm seen as not being cooperative. 

So, we have developed a process where HUD will play an active role to be sure there is a fair and equitable distribution of dollars. This process encourages people to work together on a local level. It also ensures that decisions about LA are not made in Washington by staff who are unfamiliar with Los Angeles' city-and county-wide programs. 

A few weeks ago the Chicago Housing Authority was federalized. The chairman resigned, and there is some concern about the future of that authority. What are implications of such actions by HUD for cities in Southern California, like Los Angeles? 

HUD's involvement in Chicago addresses the need to transform public housing as part of the reinvention HUD is proposing. This is not an issue here: Los Angeles has an effective Housing Authority, good leadership, and has demonstrated their interest in pursuing privatization and competition in the market place. Those housing authorities that have substantial problems will be required to transition to a new way of doing business to meet the changing demands of public housing. 

Puerto Rico is another housing authority where HUD has stepped in with a team of experts and is beginning to turn it around. When you look, however, at the east coast versus west coast, the west coast did not build high-rise types of housing projects. So, the problems you have in Chicago and other cities are unique, and you are not likely to find those same problems here in Los Angeles or California. 

HUD's historical constituency, and this is even more so these past two years, has been described as being made up of the poorest of the poor, and this seems to be politically incorrect in 1995. To survive in Congress, will HUD's constituency have to change? 

I don't think HUD will stop serv­ing the poorest of the poor. I believe, however, HUD has realized that they need to serve the private housing market for middle-income individuals and families. In early June the President announced a new national home ownership strategy to increase the number of homeowners by 8 million. There has also been a push from Fannie Mae on the GSE's to have them further target those populations that don't have access to capital. 

Given the changes in federal housing policy taking place as we speak, if you were playing the role of advisor to Mayor Riordan (much the way Michael Bodaken advised Mayor Bradley) what in the way of advice on housing priorities and policies, would you whisper in his ear? 

I would advise him that federal dollars will be diminishing, and that we need to look at public-private partnerships in a way that we never have before. We need to be smart about the money that we have. Also, we need to look at the demand for low-income housing. The homeless population will continue to grow without the continued development of low-income housing. 

I would also start talking about the kinds of decisions that are being made at the County level regarding general relief and welfare, and how that will impact the number of people on the street.