[Senate Hearing 111-]
[From the U.S. Government Publishing Office]



 
TRANSPORTATION AND HOUSING AND URBAN DEVELOPMENT, AND RELATED AGENCIES 
                  APPROPRIATIONS FOR FISCAL YEAR 2011

                              ----------                              


                         THURSDAY, MAY 6, 2010

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 9:30 a.m., in room SD-138, Dirksen 
Senate Office Building, Hon. Patty Murray (chairman) presiding.
    Present: Senators Murray and Bond.

                      DEPARTMENT OF TRANSPORTATION

                        Office of the Secretary

STATEMENT OF HON. RAY LAHOOD, SECRETARY

               OPENING STATEMENT OF SENATOR PATTY MURRAY

    Senator Murray. Good morning. This subcommittee will come 
to order.
    I want to welcome both of our witnesses today and thank you 
for coming here and being a part of this today.
    Last year, the administration launched the Interagency 
Partnership for Sustainable Communities. This partnership, 
among the Departments of Transportation, Housing and Urban 
Development, and the Environmental Protection Agency, 
represents an effort to use Federal resources more effectively 
to help our communities create livable and sustainable 
communities.
    This morning, we are pleased that DOT Secretary LaHood and 
HUD Secretary Donovan are here today to talk about their 
Departments' funding requests to support that partnership. This 
hearing provides us a very important opportunity for us to hear 
how these Departments are working together and how their budget 
proposals will help communities across the country.
    All across the country, Americans are making decisions 
about where to live, where to work, where to raise their 
families. They are evaluating where they can get a job, where 
they can afford to live, how much time and money their commute 
will cost, and what schools and services a community can offer.
    As the most significant expenses for most families, 
transportation and housing are central to those decisions. But 
the costs aren't limited just to dollars and cents. The 
tradeoffs impact quality of life and future opportunities.
    In communities across our country, in small towns and large 
urban centers, local leaders understand the issues facing their 
communities, and they are seeking ways to address the 
challenges of congestion and affordable housing, pollution, and 
lack of jobs. Importantly, they recognize that the health of 
their communities depends on taking a comprehensive approach to 
those challenges.
    The economic crisis has made the obstacles to affordable 
housing and economic competitiveness that much greater. We have 
seen millions of families become overwhelmed by unaffordable 
housing costs, entire communities devastated by the foreclosure 
crisis, and local economies struggle with the loss of entire 
industries.
    But as we know, efforts to create sustainable communities 
can be part of the solution. Many of our communities are still 
growing and need to decide for themselves what they want to 
look like as they develop. This isn't always about whether or 
not we should build a road, but where and how to build those 
roads so they get people where they need to go and how to 
create transportation alternatives so people don't have to get 
in their car if a bus or a bike or a subway could work better.
    Other communities aren't growing. Instead, they are trying 
to figure out the right way to reduce their size and create 
viable neighborhoods and a smaller footprint, ones that are 
connected to jobs in retail and essential services. Taking a 
comprehensive approach to housing and transportation is not 
about dreaming and idealism. It is about real decisions that 
our communities make each day.
    There is a perfect example of this in my home State of 
Washington. For years, leaders of the city of Bellevue have 
worked with residents and local businesses on a coordinated 
approach to developing the Bellevue-Redmond Corridor, which 
serves as a major thoroughfare connecting Bellevue and the city 
of Redmond.
    This Bell-Red Corridor plan is a perfect example of the 
type of comprehensive approach to sustainable, environmentally 
conscious development we are trying to encourage with the 
Sustainable Communities Initiative. It is a plan that melds 
housing, transportation, and investments to support economic 
growth and job creation.
    By better aligning Federal programs, this partnership among 
HUD, DOT, and EPA can support the work that is already 
happening in Bellevue and other communities across the country, 
unfortunately, because many of our Federal programs are based 
on outdated rules and regulations and thinking, they do not 
reward innovation and collaboration.
    Distinct programs and funding sources managed by different 
agencies and governed by different and often conflicting rules 
can make it difficult to coordinate funding streams. And sadly, 
the Federal Government provides little incentive for 
communities to think comprehensively about housing and 
transportation. That is why I worked last year to include the 
TIGER program in the Recovery Act and in the fiscal year 2010 
appropriations act.
    That program offers communities the opportunity to fund the 
best solution to their transportation needs without the Federal 
Government prescribing whether that solution should be a road 
or a transit service or railroad. But I believe that 
traditional programs should also help communities coordinate 
their housing and transportation plans.
    On the Federal level, we need to do more to reward and 
promote innovation. These incentives should not change the 
fundamental principle that choices about housing and 
transportation and economic development are best made at the 
local level. At the same time, Federal policies do impact the 
choices that communities make, and we should be designing 
policies that promote economic competitiveness, affordable 
housing, and energy efficient and healthy communities.
    HUD, DOT, and EPA have developed livability principles to 
serve as a foundation for their partnership. But the hard work 
will come in applying those principles. The President's budget 
includes several new proposals for sustainable communities, 
including $527 million for programs at the Department of 
Transportation and $150 million for programs at the Department 
of Housing and Urban Development. This is a significant 
investment, and the budget materials provide few details on how 
these resources would be used.
    I want to understand the long-term benefits of those 
investments to our communities and our transportation system 
and our economy. This subcommittee must decide how to allocate 
resources to meet the various transportation and housing needs 
across the country, and because our resources are so limited, 
we need to closely examine all budget proposals. So I will have 
questions today on the specific criteria for each of these 
programs and the standards that we will be using to evaluate 
their success.
    I will also have questions on the appropriate role for each 
of the Departments. The administration has laid out a framework 
by which HUD will be the lead on planning, DOT will provide 
capacity building, and EPA will deliver technical assistance. 
While I understand the importance of defining clear roles for 
each of the agencies, I am concerned that these roles may 
unintentionally reinforce existing silos.
    Within HUD, the fiscal year 2011 budget requests an 
additional $150 million for the Sustainable Communities 
Initiative, which Congress first funded in fiscal year 2010. 
This funding is intended to help communities on a regional and 
local level gain the tools and capacity to develop and 
implement comprehensive plans that integrate transportation and 
housing.
    In order to develop its NOFA for the fiscal year 2010 
funding, HUD has spent a great deal of time working with DOT 
and EPA to get feedback from communities and other stakeholders 
on how to most effectively design these programs. I support 
these efforts to make sure these policies are designed to meet 
the needs of communities. But at the same time, there needs to 
be clarity of purpose for this initiative and for these Federal 
resources.
    So I will have questions on how to balance the need to 
provide communities with the flexibility to address their 
specific needs with the need to have some structure at the 
Federal level to make sure they are sound Federal investments.
    The budget proposal from the Department of Transportation 
includes $200 million for grants to provide transportation 
planners with the analytical tools to develop more reliable 
forecasts. The administration has proposed paying for these 
grants with funds taken from the regular highway program, and I 
have very serious concerns about that.
    DOT's proposal also includes $307 million in existing 
transit funds that have been combined into a new livable 
communities account, but without any apparent change in the 
purpose. I look forward to hearing more rationale for this 
proposal, and I will also have questions about how these 
proposals for DOT fit into our larger debate over 
reauthorization.
    Americans have long realized that quality transportation 
and housing are critical elements for vibrant communities that 
can foster private sector investment and create good jobs. I 
believe this interagency partnership has the potential to 
address many of the challenges that communities are facing and 
help them achieve those goals.
    There is no one-size-fits-all approach to the many 
transportation and housing challenges our communities face. The 
Federal Government cannot prescribe the solutions, but it 
should be able to assist communities in developing them and 
prove the appropriate incentives to do so.
    Changing practices and thinking in our Federal Departments 
and local communities will not be easy. People are always 
comfortable with what they know, and change is difficult. So I 
commend each of you for the leadership you have demonstrated in 
breaking down silos and pushing for leaders on the Federal and 
community level to think in a new way about the best way to 
make Federal investments.
    With that, I will turn it over to my ranking member, 
Senator Kit Bond for his opening statement.

            OPENING STATEMENT OF SENATOR CHRISTOPHER S. BOND

    Senator Bond. Thank you, Madam Chair.
    And welcome, Secretary LaHood and Secretary Donovan. We 
appreciate both of them coming today, good friends who are 
working with us on things that are very, very important in our 
States and throughout the country.
    And today's hearing is about coordinating Federal housing 
and transportation investment in our communities. If done 
properly, this cooperation between Government agencies could be 
a way to stretch responsibly taxpayer dollars and truly get the 
best bang for the buck.
    However, as I indicated to you gentlemen prior to the 
hearing, I have a philosophical question about that because 
this seems to indicate that the Federal Government is the one 
that is going to decide what makes a community livable. And I 
am concerned that we are looking to the Federal Government to 
be involved in the decisionmaking.
    Now we already know that the Federal Government helps fund 
the planning agency. We have got planning agencies at home, the 
MPOs, the RPCs. Their job is to work local officials and get 
local input and decide which way their communities should grow, 
what they need, and I want to support that effort.
    The chair mentioned Bellevue, Washington, and I could go 
around the State of Missouri to tell you about Columbia, 
Missouri, which wants bike paths. Everybody else wants roads. 
They want bike paths. We fought to get them bike paths. St. 
Charles needs a river dredged. We want to try to help St. 
Charles get the river dredged.
    I am not as confident that entrusting Federal 
decisionmakers in Washington to lead the process and tell 
communities how they should go is the right way to grow. I have 
fought for years to say that we have the plans at the local 
level, and we want to work with you to make sure that your 
agencies carry out their core responsibilities to provide our 
communities the roads, highways, and bridges they need and the 
affordable, low-cost housing and public housing that are 
needed.
    And I want to make sure that these decisions are supported 
by the Federal Government. I do not see it as the 
responsibility of any Federal agency to tell our towns and 
cities what would make their communities more livable or 
sustainable or even to try to define the term of what they want 
their communities to be.
    They want it livable. They want it sustainable. I am 
concerned about it, and I have, for example, I have mentioned 
previously when you asked people in Missouri, the part of 
Missouri I live in what makes--how DOT can help us make a 
livable community. Their answer is going to be to make the 
highways safer because, well, in rural areas people have to 
travel.
    They work on farms. They live in dispersed cities. They 
have to travel. Their children have to go to school. Their 
elderly have to get healthcare. Our roads and bridges in 
Missouri are out of date. We kill over 1,000 people a year, 
almost 3 people a day, and at least one-third of those deaths 
are attributable to unsafe highway conditions.
    And on the other side, there are housing shortages. There 
are rental housing shortages in some areas. There are things 
that we need to work on, and we appreciate the working 
cooperation with HUD to make sure we take care of those needs.
    But I want to see these decisions made at the local level, 
but I want to thank HUD especially for the efforts that you 
have made. We have got some, what is it, 900 pages of comments 
on what they want at the local level.
    Well, I--just to be frank, I don't have any question--I 
know planners, and I have worked with planners. And if you go 
out and tell a bunch of planners that we would like to get your 
plans to see how you could spend the money to plan to take care 
of our priorities, they would be more than happy to submit 
plans for how they are going to use more money to plan. And if 
it is only 900 pages, they are just not trying.
    But I want to see those planning efforts focused on 
planning at the local level for what they need to do.
    And again, I share the same concerns that the chair 
mentioned that we have a very tight budget, and I have 
complained about this before. We have got so many demands at 
the same time we have a record budget this year of $1.6 
trillion, 10.6 percent of our GDP. We are borrowing that from 
our children and grandchildren, and we have to keep our 
spending under control.
    And I am concerned about committing scarce dollars, an $827 
million program that we can't even name, when we have really 
pressing needs in transportation and housing that we have 
already identified. And I would like to see the money in 
highways spent on highways. We need a lot more of it there, and 
we have tremendous needs in the housing area.
    And I am still looking, Mr. Secretary, for the rationale on 
which HUD awarded the $2 billion in competitive neighborhood 
stabilization program grants. I would like to see some more 
transparency in that process. And I would like to see the 
criteria on which the TIGER grant applications were awarded and 
what were their ratings.
    Basically, we want to see more transparency at the Federal 
level. But I am very interested in making sure that the dollars 
that we have available go to the core responsibilities that you 
have and that we don't take money away from programs which I 
believe are already pressed, and that is the housing program, 
the transportation program. We have got more needs than we can 
reasonably afford with what is likely to be people tell me a 
tight budget allocation.
    And I would close by just saying that we hope that you will 
go back to the process that we have specified in law before and 
will again that Congress be notified 3 days prior to 
announcement with backup materials and information on how 
awards were made, where they are discretionary awards made by 
HUD, where those monies are going, and we would like to know--
and how they were selected. We would like to know the same 
thing from the Department of Transportation.
    But I thank you very much for the work that you have done 
on it. I am still confused about what we are trying to do. If 
you all can't agree whether it is livability or sustainability 
and the fact that you will know it when you see it, if that is 
going to be the criterion, I think that is a criterion that the 
local leadership can choose and can apply better than we in 
Washington can.
    Thank you, Madam Chair.
    Senator Murray. Thank you very much, Senator Bond.
    With that, again we welcome both of our witnesses today, 
and Secretary LaHood, we are going to begin with your 
testimony.

                      STATEMENT OF HON. RAY LAHOOD

    Secretary LaHood. Madam Chair and Ranking Member Bond, 
thank you for your leadership on so many of these issues that 
we deal with on a daily basis. We are grateful to you for all 
that you do to enable us to carry out the mandates of Congress, 
and we also thank you for the opportunity to discuss the 
Department of Transportation's efforts to promote livable 
communities through our current programs and to highlight our 
related budget request for fiscal year 2011.
    Over the last 16 months, I have traveled to 80 cities in 38 
States, and everywhere I go, Americans are asking for more 
public transportation, more walkable neighborhoods, less 
congestion, and less sprawl. Livable communities are in great 
demand because they make financial and economic sense.
    Transportation and housing are the two largest household 
expenses for the average American family. In order to reduce 
those costs and strengthen our communities, we must rethink our 
planning, our priorities, and our investments in the Nation's 
transportation infrastructure.
    We need a new approach that will improve the quality of 
life in cities and towns across this country while helping us 
to save billions in infrastructure and energy costs through the 
application of livable and smart growth principles we have 
developed with our friends at HUD and EPA. We are already 
making substantial progress by creatively leveraging our 
existing programs, and we have clearly demonstrated that the 
American people believe we are headed in the right direction.
    We recently funded a project in Dubuque, Iowa, to design 
streets that are attractive, convenient, and safe for a broad 
range of transportation users. Dubuque's efforts helped to 
attract an IBM employment center of more than 1,500 people to 
the city.
    In Seattle's Mercer Corridor, a hub for biotechnology 
companies, we are investing in better roads with bicycle lanes, 
improved access to transit, and upgrading local water, sewer, 
and electrical infrastructure. These improvements will help 
attract and retain a well-qualified workforce to Seattle's 
biotech community.
    And one other noteworthy project, which I have mentioned 
before when I have been here, Kansas City, Missouri, where they 
are taking a 150-block distressed urban community called Green 
Impact Zone to significantly expand transit and pedestrian 
facilities for the first time in the community's history. This 
offers residents brand-new access to clean, reliable 
transportation to get to jobs, schools, hospitals, and connect 
with the rest of downtown.
    This project in particular is a national model 
demonstration of integrating place-based investments--how 
place-based investments can apply the principles of 
sustainability to help transform a community. In addition, our 
decision earlier this year to include a range of livable 
criteria evaluating transit capital projects through FTA's New 
Starts program also elicited a huge outpouring of support.
    Meanwhile, we are helping to educate and empower local 
communities on how to make livable projects a reality by 
providing information and training in new ways. This includes 
guidance on transit-oriented development we have prepared with 
HUD. Elected officials, planners, and developers should find 
this information very valuable.
    We released a notice of finding for a pilot program 
administered by the FTA that will enable urban and rural 
communities to put more buses, trolleys, and other local 
transit on the street. And along with our friends at EPA, we 
are sharing our expertise in support of HUD's efforts to award 
planning and challenge grants to help communities become 
laboratories for sustainability.
    Looking ahead to 2011, the President's budget includes $520 
million for a livable community program that will accomplish 
several key objectives. It will establish an Office of 
Livability to ensure we lead and coordinate our livable-related 
programs and grants DOT wide and create appropriate performance 
measures.
    Too often local governments and planners do not have access 
to the best, most comprehensive information that is essential 
to making better, more informed transportation investments that 
generate the desired outcomes. We must remedy that in 
partnership with our friends at HUD and EPA.

                           PREPARED STATEMENT

    We will fund transit and capacity-building initiatives that 
give State and local governments the tools, resources, and 
assistance they need to better coordinate transportation, 
housing, land use planning, and water infrastructure. Our 
livable proposal is a starting point for a bold new approach to 
revitalize the Nation's transportation infrastructure. The 
President's budget and the administration's future surface 
transportation proposals reflect these and many other 
innovative ideas.
    We look forward to your questions following Secretary 
Donovan's testimony.
    Senator Murray. Thank you very much, Mr. Secretary.
    [The statement follows:]

                 Prepared Statement of Hon. Ray LaHood

    Thank you for inviting me to appear before you today to discuss the 
Department of Transportation's (DOT) current efforts to promote livable 
communities through our existing programs and our budget request for 
fiscal year 2011.

          INTERAGENCY PARTNERSHIP FOR SUSTAINABLE COMMUNITIES

    As a Nation, we pride ourselves on the livability of our 
communities, one in which every American has access to affordable 
housing, good transportation choices and access to jobs. Making 
America's communities more livable is a key part of the President's 
agenda, and the administration is already making important advancements 
in this area. Last June, DOT joined forces with the Department of 
Housing and Urban Development (HUD) and the Environmental Protection 
Agency (EPA) to stimulate comprehensive regional and community planning 
efforts that integrate transportation, housing, energy and other 
critical investments. Together, we will help State and local 
governments make smarter investments in their transportation 
infrastructure, in order to better leverage that investment, and to 
advance sustainable development.
    The Department's budget allocates over $500 million toward this 
effort. It's an investment that is already receiving national 
attention. As I have traveled around the country soliciting input on 
our Surface Transportation Reauthorization, I heard resounding support 
for our livability initiative. The feedback has been clear: it's time 
to rethink how we are investing in our Nation's communities.
    Toward this effort, DOT, HUD, and EPA have developed the following 
principles to guide our shared efforts to promote livability:
  --Provide More Transportation Choices.--Develop safe, reliable and 
        economical transportation choices to decrease household 
        transportation costs, reduce our Nation's dependence on foreign 
        oil, improve air quality, reduce greenhouse gas emissions and 
        promote public health.
  --Promote Equitable, Affordable Housing.--Expand location- and 
        energy-efficient housing choices for people of all ages, 
        incomes, races and ethnicities to increase mobility and lower 
        the combined cost of housing and transportation.
  --Enhance Economic Competitiveness.--Improve economic competitiveness 
        through reliable and timely access to employment centers, 
        educational opportunities, services and other basic needs by 
        workers as well as expanded business access to markets.
  --Support Existing Communities.--Target Federal funding toward 
        existing communities--through such strategies as transit 
        oriented, mixed-use development and land recycling--to increase 
        community revitalization, improve the efficiency of public 
        works investments, and safeguard rural landscapes.
  --Coordinate and Leverage Federal Policies and Investment.--Align 
        Federal policies and funding to remove barriers to 
        collaboration, leverage funding and increase the accountability 
        and effectiveness of all levels of government to plan for 
        future growth, including making smart energy choices such as 
        locally generated renewable energy.
  --Value Communities and Neighborhoods.--Enhance the unique 
        characteristics of all communities by investing in healthy, 
        safe and walkable neighborhoods--rural, urban or suburban.

                  CURRENT DOT AND PARTNERSHIP EFFORTS

    DOT has already begun using these principles in its programs.
    For example, the recent change in the criteria for FTA's New Starts 
grants will ensure that the Department considers livability in its 
funding recommendations of transit capital investments. Previously, 
cost-effectiveness was the primary factor used in making a 
recommendation for construction funding, a criterion that uses travel 
time savings to quantify a project's benefits as a comparison to 
project cost. FTA will now equally consider cost-effectiveness, and 
economic, environmental, and livability factors to determine the best 
use of funds.
    We are also making tools available to transportation professionals 
and the public to build their capacity to implement livability projects 
at the community level. For example, DOT and HUD produced an action 
guide last November to help planners implement mixed-income transit 
oriented development and regional transit corridor planning. This 
guide, now available online, takes planners step-by-step through the 
data gathering and planning process. DOT is also working to develop an 
online database for transit-oriented development, which includes over 
4,000 existing and planned rail/transit stations. This database will 
provide a central resource of transit planning information for 
developers, and will be available to the public by the end of the 
summer.
    To foster the preservation and enhancement of urban and rural 
communities by providing better access to jobs, healthcare and 
education, DOT released a Notice of Funding Availability (NOFA) in 
December for two new pilot programs that would provide funding for 
livability projects from existing funds: up to $150 million is 
available for bus livability projects and $130 million for urban 
circulator grants.
    DOT and EPA are also supporting the development of HUD's NOFA for 
sustainable community grants authorized in the fiscal year 2010 budget. 
DOT and HUD collaborated in the grant selection process and are 
providing staff to assist communities that received EPA's smart growth 
technical assistance grants. Through these discretionary grant and 
technical assistance dollars, DOT, HUD, and EPA are providing States 
and communities with opportunities to build the livable communities 
that are so important to their economic growth and quality of life.

              LIVABLE COMMUNITIES PROMOTE QUALITY OF LIFE

    Citizens are changing their preferences toward livable communities, 
and State and local governments are responding to constituent demands. 
In fact, EPA has found through consumer surveys that at least one-third 
of the consumer real estate market prefers a mixed use, transit-
oriented community. The needs and desires of the U.S. home buyer also 
are changing: many consumers in the early 1990s had a preference for 
golf courses and other recreational amenities. Today, surveys indicate 
that many consumers prefer walkable communities--communities 
characterized by pedestrian access and a sense of connection, 
community, and diversity.
    Livable communities are in high demand because they make financial 
and economic sense. Transportation and housing are the two largest 
expenses for the average American household. Reducing the need for 
private motor vehicle trips by providing access to other transportation 
choices can lower the average household expenditure on transportation, 
freeing up money for housing, education, and savings. Realtors, 
developers, and investors recognize that an increase in walkability 
translates into a higher home value.
    The application of livability strategies can also save billions in 
infrastructure investment. For example, Envision Utah brought together 
residents, elected officials, developers, conservationists, business 
leaders, and other interested parties to participate in the development 
of a growth plan for Salt Lake City and the surrounding area. The 
process, which included outreach and comprehensive planning efforts, 
will help preserve critical lands, promote water conservation and clean 
air, promote public health, improve the region-wide transportation 
systems, and provide housing options for all kinds of residents. By 
coordinating investments, the plan saved $4.5 billion in infrastructure 
costs over the last decade. This example shows that as we make our 
communities more livable, we can also decrease the strain on natural 
resources, decrease greenhouse gases, improve air quality, and promote 
public health by supplying more efficient options for transportation 
and housing--all while decreasing infrastructure costs and the burden 
on the American taxpayer.

     LIVABLE COMMUNITIES' INVESTMENTS SUPPORT BOTH RURAL AND URBAN 
                              COMMUNITIES

    Livability also can play a substantial role in small towns and 
rural communities. The concept of livability comes from rural towns 
with a town center that is walkable and accessible to all ages and 
income groups. Rural communities, however, face special challenges that 
threaten traditional community design. Past transportation policies 
have resulted in many rural Main Streets being bypassed by the 
interstate highway system, which contributed to the decline of once-
vibrant business centers. Many rural communities located close to 
cities have lost farm land and open space as urban areas subsume them. 
Transportation costs are often significantly higher for residents of 
rural communities, especially those with longer commutes to employment 
centers. Better coordination of housing and transportation will lead to 
policies and programs that protect and safeguard open space and 
agricultural land in rural areas, preserve the historical culture of 
rural city centers, and provide rural residents with transportation 
options that decrease their household costs.
    Livability will certainly take a different form in rural areas than 
in urban city centers, but a small town with a walkable, main street 
lined with spaces for retail, employment and housing is something we 
can all picture. Franklin, Tennessee is a small city 25 miles southwest 
of Nashville that has adopted land-use plans and has adjusted their 
zoning ordinances to promote higher density mixed-use development. Bath 
is a small town in southwest Maine whose historic downtown area is a 
model of a livable community. The town provides two trolley loops to 
transport residents and tourists through downtown, reducing the need 
for on-street parking. Bath's street design encourages citizens to get 
out of their cars, which in turn supports local merchants through 
increased foot traffic.
    My favorite example is Dubuque, Iowa, which I had the pleasure of 
visiting last year. In its Historic Millwork District, Dubuque is 
redeveloping old factories and mills--dormant since the early part of 
the 20th century--to create new mixed income housing, workplaces and 
entertainment. Sustainable transportation options are important to this 
plan. The city's trolley bus now connects the Millwork District to 
downtown. We also funded a project to design streets in this district 
that are attractive, convenient and safe for a broad range of users, 
including drivers, public transit, pedestrians, bicyclists, people 
without access to automobiles, children and people with disabilities. 
Dubuque's efforts, in part, attracted IBM to move its employment center 
to the area, where it will provide over a thousand new jobs for the 
city. With its ``Smart City'' partnership with IBM, Dubuque has become 
a model for other cities seeking new livable uses for its established 
infrastructure.
    We are seeing this emphasis on livability not only in rural 
communities, but in urban and suburban communities as well.
    In September, Secretary Donovan, Administrator Jackson, and I 
visited Denver's La Alma/Lincoln Park neighborhood, which is a 
predominantly Latino neighborhood and also one of Denver's oldest. The 
10th and Osage station, which adjoins an industrial area, a diverse 
existing housing stock, and the Sante Fe Arts District, is serving as a 
catalyst for Lincoln Park's redevelopment. The South Lincoln Park Homes 
redevelopment, planned around the 10th and Osage station, calls for 
developing mixed-use, mixed-income housing within walking distance of 
the station, to create a more dense and walkable community. It also 
focuses on improving transportation connections within the La Alma/
Lincoln Park neighborhood for its residents to improve job access.
    Portland is planning for the growth and development of its city 
center and transit systems, strengthening policies to form a denser 
bike network, and investing in streetcar and light rail. Our TIGER 
grant program has helped them with this by funding over $23 million 
toward the reconstruction of a complete street on their waterfront--
including three traffic lanes, dual streetcar tracks and pedestrian and 
bicycle facilities--allowing increased access to the central business 
district.
    In Seattle, we are helping to invest in turning a major roadway 
into a multi-modal boulevard. They have instituted smart growth 
policies and transportation investments that encourage urban living and 
reduce dependence on cars, as well as encourage strong sustainable 
building standards.
    When I was in Minneapolis in January, I got a chance to tour a 9.8 
mile light rail transit line between the downtowns of the twin cities, 
Minneapolis and St. Paul. By balancing our cost-effectiveness criteria 
with equity considerations in our transit program, we will be able to 
help fund three additional stops on this line to serve underserved and 
lower income communities that otherwise would not have had access to 
this mode of transportation.
    Kansas City, Missouri, is another great example. DOT recently 
awarded a $50 million TIGER grant to Kansas City for their Green Impact 
Zone project, which will provide better access to regional 
opportunities through expanded transit and pedestrian facilities. This 
project will improve infrastructure in a 150-block area in the urban 
core of Kansas City, Missouri that has been impacted over the years by 
high rates of poverty, unemployment, crime, and high concentrations of 
vacant and abandoned properties. Partners in the Green Impact Zone are 
creating a national model that demonstrates how integrated, place-based 
investments, centered on principles of sustainability, can transform a 
community.

                    FISCAL YEAR 2011 BUDGET REQUEST

    The President's Budget includes $527 million for livable community 
efforts in DOT. This funding will support three areas: a Livable 
Communities Program within the Office of the Secretary (OST); transit 
funding to support livable communities in the Federal Transit 
Administration (FTA); and a capacity-building grant program in the 
Federal Highway Administration (FHWA). The purpose of these programs is 
to provide transportation practitioners with the tools, resources, and 
capacity they need to develop a transportation system that provides 
transportation choices, saves people money, protects the environment, 
and efficiently moves goods.
    This budget request was developed in coordination with the requests 
for HUD and EPA. As you will hear from Secretary Donovan, HUD's program 
focuses on improving regional planning to integrate housing and 
transportation decisions. EPA's role is designed to administer 
technical assistance to communities to pursue infrastructure 
improvements in ways that protect public health and the environment.
    DOT's program supports two vital needs: capacity building in 
transportation planning and financial assistance to initiate innovative 
infrastructure investments. This benefits State and local governments, 
which currently use outdated planning and regional models and poor data 
to make their transportation investment decisions. Because of 
competition for scarce resources, sometimes innovative solutions can 
take a back seat to the more pressing needs of maintenance and repair. 
By targeting some investment funding, DOT hopes to demonstrate that 
smart investment up front can save communities tax money over time by 
strengthening communities and lowering infrastructure costs.
    The President's budget includes $20 million to establish a new 
Livable Communities Program, including a new Office of Livability 
within OST. This Office will lead and coordinate livability programs 
across the Department's modal administrations and provide grants and 
technical assistance for improving local public outreach. It will serve 
as the focal point for interagency efforts such as the Partnership for 
Sustainable Communities and spearhead efforts such as developing 
metrics and performance measures for livability.
    Three hundred and seven million dollars is requested to refocus 
existing FTA programs to expand transit access for low-income families, 
provide effective transportation alternatives and increase the planning 
and project development capabilities of local communities. 
Consolidating the Job Access and Reverse Commute formula grants, 
Alternatives Analysis grants, and formula grants for State and 
metropolitan planning will allow DOT to better coordinate efforts with 
HUD and EPA to develop strategies that link quality public 
transportation with investments in smart development.
    The President's budget requests $200 million to fund a competitive 
livability program within FHWA. This discretionary grant program aims 
to improve modeling and data collection, provide training, and support 
organizational changes to better carry out integrated planning. This 
assistance would be available to States, local governments, and tribal 
partners.

                            LOOKING FORWARD

    What I have described so far is just the starting point for what we 
hope to be a robust livability initiative, both within DOT and among 
our partnering agencies. The President's budget marks a bold new way of 
thinking about investments in our transportation infrastructure and 
will become a key component of the administration's future surface 
transportation proposal. The programs requested in the President's 
budget have been designed to further the goals of the Partnership for 
Sustainable Communities and to assist regions and communities in need 
of Federal assistance to pursue their own planning and development 
needs. By providing capacity building, planning funds, and technical 
assistance, DOT, HUD, and EPA can help communities meet the demands 
that they face for developing these types of neighborhoods.
    Looking forward, reauthorization of our surface transportation 
programs will provide an important opportunity to focus on livable 
community investments that foster transit-oriented, pedestrian and 
bike-friendly development, provide more transportation choices, and 
offer better access to jobs and housing.
    Thank you for the opportunity to appear before you today to discuss 
the efforts of our Partnership for Sustainable Communities and the 
Department's fiscal year 2011 budget request to support this effort. We 
look forward to working with Congress and our stakeholders to make this 
a reality.
    I will be happy to answer any questions you may have.


              DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

                        Office of the Secretary

STATEMENT OF HON. SHAUN DONOVAN, SECRETARY

    Senator Murray. Secretary Donovan.
    Secretary Donovan. Thank you, Chairwoman Murray, Ranking 
Member Bond. I want to thank you for this opportunity to 
provide an update on HUD's efforts to help urban and rural 
areas across the country create more sustainable homes and 
communities.
    I also want to take a moment to thank Ray and his entire 
team, as well as Lisa Jackson, for their just tremendous 
partnership on this effort.
    I have submitted more complete testimony for the record, 
but today I would like to use my time to report on the progress 
we have made, thanks to this subcommittee's support through the 
Recovery Act and the $200 million Office of Sustainable Housing 
and Communities appropriation for our fiscal year 2010, and to 
share with you our plans in the coming months.

             OFFICE OF SUSTAINABLE HOUSING AND COMMUNITIES

    In February, HUD launched this office to help coordinate 
our investments with the Departments of Transportation, EPA, 
and Energy, and other agencies at the Federal level, as well as 
allowing us to work directly with communities to support 
innovation at the local level.
    With a combination of housing and transportation costs now 
averaging more than 50 percent of income for American families, 
we formed a sustainability partnership with DOT and EPA because 
when it comes to housing, environmental, and transportation 
policy, it is time the Federal Government spoke with one voice. 
And the partnership is working.
    In addition to the examples that Ray cited, in cities like 
Detroit, you can see that we are not only talking to one 
another, we are making funding decisions together that improve 
outcomes for local communities. In the first round of DOT's 
TIGER grant program under the Recovery Act, DOT awarded $25 
million for the Woodward Avenue Streetcar Project in Detroit. 
All three agencies reviewed the city's application.
    HUD brought to DOT's attention community development 
activities already planned or underway in the Woodward Avenue 
Corridor, which made the site a more attractive investment for 
DOT. The EPA was able to highlight brownfield remediation 
efforts in the vicinity of the project, which will allow 
abandoned properties along the streetcar line to be recycled 
for economic development and affordable housing.
    As a result, we believe this transportation investment has 
the potential to fundamentally transform one of the most 
historic neighborhoods of the city and is an example of the 
more effective award process in communities throughout the 
country.
    A similar process will unfold with the selection of HUD's 
regional planning and local challenge grants this year. With 
this subcommittee's support, we are preparing to launch a $100 
million sustainability planning grant program to encourage 
metropolitan and rural regions to plan for integration of 
economic development, land use, and transportation investments.
    We issued an advance notice and request for comment for the 
program, inviting feedback through a new online Wiki accessible 
via HUD's Web site and through an extensive listening tour 
around the country. We wanted communities to tell us what 
works, what isn't working, and how we can better help them 
build sustainably.
    Just as important, we hope to send a very important signal 
that we in the Obama administration are serious about being the 
kind of partner that listens and learns. And the response has 
exceeded even our expectations. We received over 900 written 
comments, met with over 1,000 stakeholders in 7 listening 
sessions, and staged Webcasts that touched thousands more.
    And the feedback we received was overwhelmingly positive as 
well, from mayors and other officials of both small and large 
communities to business leaders in growing regions to Governors 
of States that have been hit hard economically. One example of 
how this feedback changed our thinking is with respect to small 
towns and rural areas. The White House convened a special focus 
group to discuss the needs of such communities, and in this 
session and the many letters we received, we heard concerns 
that larger communities in central cities might receive 
preference for these funds despite the great need in rural 
America.
    Indeed, Madam Chairwoman, while rural communities generally 
have less access to public transportation, higher poverty 
rates, and inadequate housing, at HUD we recognize that 
residents of these communities also face unique challenges when 
it comes to accessing healthcare, grocery stores, adult 
education opportunities, and many other services. This is 
something it is with communities like St. Peter, Minnesota, 
which Deputy Secretary Sims visited last month with the 
Department of Agriculture, and how they have responded to these 
challenges that we will ensure that small towns and rural 
regions have a better shot at competing in this NOFA through a 
special category of funding.

                         ENERGY INNOVATION FUND

    While these funds are targeted at the regional level, 
another $40 million will support local efforts through a 
Community Challenge Planning Grant. With these funds, HUD has 
chosen to issue a joint NOFA with DOT for its TIGER II planning 
grant program. At the same time, with our $50 million Energy 
Innovation Fund as part of the 2010 budget, we are developing 
new and innovative low-cost financing for single and 
multifamily programs, including taking an energy-efficient 
mortgage product to scale.
    It could provide key incentives to both buyers and sellers 
who want to make much-needed energy improvements in their 
homes. But this office isn't limited to the successful 
implementation of these funds alone. The Office of Sustainable 
Housing and Communities is also active in other partnerships as 
well.
    Over this past year, HUD has been working with the 
Department of Energy to eliminate duplicative rules that 
sharply limited the $5 billion in Federal weatherization funds 
from being available to retrofit multifamily properties. By 
simply cutting through red tape, we have helped pave the way 
for Rhode Island to allocate $7 million, one-third of its 
weatherization funding, to multifamily housing, and Colorado to 
weatherize an expected 1,000 multifamily units by June of this 
year and another 1,600 in the next fiscal year.
    As a result, thousands of low-income families living in 
multifamily housing across the country stand to see their 
utility bills reduced. The President has set a goal of 
weatherizing 1 million homes per year. As part of the HUD-DOE 
partnership, we have made income eligible more than 1.5 million 
units of HUD-qualified homes that could potentially use 
weatherization funding.
    Indeed, we at HUD have set a goal of retrofitting or 
building 159,000 energy-efficient homes over the next 2 years, 
including 85,000 funded through the Recovery Act. Obviously, 
this is only a sample of the work we are doing. My written 
testimony offers a more complete picture of the scope of our 
sustainability work to date.
    As you know, we are requesting $150 million for the second 
year of the Sustainable Communities Initiative in our fiscal 
year 2011 budget, including a second round of regional planning 
grants administered by HUD in collaboration with DOT and EPA 
and additional investment in challenge grants to help 
localities implement these plans.
    Senator Dodd has also introduced legislation that would 
make some of our initiatives permanent and look forward to 
working with him and your counterparts on authorizing 
committees toward that end.
    But Madam Chairwoman and Ranking Member Bond, I hope you 
can see that this funding is producing real results at the same 
time it is helping to fundamentally transform the way the 
Federal Government does business. It is helping us prove that 
the Federal role isn't about dictating what localities can or 
can't do and how to do it, but rather offering them the 
resources and tools to help them realize their own visions for 
achieving the outcomes that we all want, outcomes like less 
time commuting and more time with family, neighborhoods where 
kids can play outside and breathe clean air, and communities 
with opportunities for people of all ages, incomes, races, and 
ethnicities.

                           PREPARED STATEMENT

    That is the goal of these efforts, and it is why I am so 
proud to work with my partners in the administration and this 
subcommittee.
    Thank you for this opportunity.
    [The statement follows:]

                Prepared Statement of Hon. Shaun Donovan

    Chairman Murray, Ranking Member Bond and distinguished members of 
the subcommittee, thank you for this opportunity to provide an update 
on HUD's expanding efforts to help urban and rural areas across the 
country create more sustainable homes and communities. Thanks to this 
subcommittee's support, both through the American Recovery and 
Reinvestment Act and through this year's appropriation to support new 
sustainable housing and communities grant programs, we have been able 
to make substantial progress on an ambitious agenda in our first year. 
I am pleased to share with you today our early results and plans for 
the future.
    My testimony has three main sections. The first highlights the 
results to date of HUD's Recovery Act investments in sustainable 
housing and communities, which has laid the foundation for much of our 
continuing commitment. The second summarizes the groundbreaking 
sustainability partnerships HUD has formed with other Federal agencies, 
building the framework for unprecedented collaboration and impact on 
the ground. The third describes the major activities HUD has underway, 
led by the new Office of Sustainable Housing and Communities, which 
will focus our efforts to ensure this agenda remains an enduring 
priority for the Department. First, however, I want to provide context 
for HUD's commitment in this area.

   THE NEED FOR FEDERAL LEADERSHIP TO ADVANCE SUSTAINABLE HOMES AND 
                              COMMUNITIES

    While the consequences of climate change are complex and far 
reaching, we know that the increasing emissions of greenhouse gases, 
the primary cause of global warming, are largely a result of energy use 
in our ``built environment.''
    As a Federal cabinet agency focused on the built environment, 
strengthening communities, and expanding opportunity for all Americans, 
HUD recognizes the urgent need for aggressive action to combat climate 
change. The positive news, and the powerful opportunity, is that we can 
cut greenhouse gas emissions, while creating jobs and expanding 
opportunity for all Americans through proven strategies for creating 
more sustainable homes and communities.
    Residential housing and the built environment are major 
contributors to energy consumption and global warming. Residential 
buildings alone account for 20 percent of U.S. carbon emissions, with 
the vast majority coming from detached single-family houses. It may be 
surprising to many, but all types of buildings combined actually 
account for more emissions than the entire transportation sector. The 
transportation sector accounts for about another one-third of carbon 
emissions, among many factors because sprawling development patterns 
separate jobs and houses that, without adequate public transportation 
systems, necessitate long commutes and increased dependence on car 
travel.
    This is no coincidence. During the housing boom, many real estate 
agents suggested to families that couldn't afford to live near job 
centers that they could find a more affordable home by living farther 
away. Lenders bought into the ``Drive to Qualify'' myth as well--giving 
easy credit to home buyers without accounting for how much it might 
cost families to live in these areas or the risk they could pose to the 
market. While some home buyers were aware of the risk they were taking 
on, others were not. And all of these families found themselves 
vulnerable to gasoline price fluctuations, as they drove dozens of 
miles to work, to school, to the movies, to the grocery store, spending 
hours in traffic and spending nearly as much to fill their gas tank as 
they were to pay their mortgage. And some places more--like Atlanta, 
where housing and transportation costs total 61 percent of family 
income or East Palo Alto, California where they consume over 70 percent 
of family budgets.
    The social equity implications of current growth patterns have also 
become more apparent. As metropolitan areas continue to sprawl outward 
and jobs become increasingly dispersed, fewer low-wage earners and 
renters are able to find housing near their work. Nationally, 45 
percent of all renters and two-thirds of low-income renters live in 
central cities. Low-income families, many of them minorities, live in 
neighborhoods that limit access to quality jobs, good schools and 
opportunities to create wealth. Indeed, some studies have found that 
zip code predicts poor educational, employment, and even health 
outcomes. The unbalanced nature of metropolitan housing development has 
strained urban, suburban and rural household budgets, as commutes 
lengthen: the combination of housing and transportation costs now 
average a combined 60 percent of income for working families in 
metropolitan areas.
    With few exceptions, the Federal Government has historically not 
been up to the task of addressing these critical trends. Federal 
programs dealing with housing, transportation and energy issues remain 
largely separate from each other, precluding smart, integrated problem 
solving. Federal policies and rules are narrowly defined, poorly 
coordinated and often work at cross purposes. The silo driven nature of 
Federal policies and programs extends to planning, data collection, 
performance measurement and research and evaluation. To address these 
and other issues, the administration has launched the first 
comprehensive review of ``place based'' Federal policies since the 
Carter administration, with sustainability as a central focus--asking 
each agency to determine whether Federal policies enable and encourage 
locally-driven, integrated, and place-conscious solutions, or obstruct 
them.
    Place of course is already at the center of every decision HUD 
makes. Today, HUD's programs reach nearly every neighborhood in 
America; 58,000 out of the approximately 66,000 census tracts in the 
United States have one or more unit of HUD assisted housing. Now we 
have seized this opportunity to renew our focus on place, to better 
nurture sustainable, inclusive communities across America's urban, 
suburban, and rural landscape.
    A major component of HUD's place-based approach involves making 
communities sustainable for the long-term. For HUD, ``sustainability'' 
includes improving building level energy efficiency, cutting greenhouse 
gas emissions through transit-oriented development, and taking 
advantage of other locational efficiencies. Critically, we believe 
sustainability also means creating ``geographies of opportunity,'' 
places that effectively connect people to jobs, quality public schools, 
and other amenities.
    But it's not just about what we think at HUD or in the Federal 
Government. Sustainability means different things to different kinds of 
communities. If you asked John Hickenlooper, the Mayor of Denver, where 
they are building more than 100 miles of new light rail, commuter rail, 
and bus rapid transit lanes, linking the 32 communities surrounding 
Denver proper, he'd tell you sustainability is about building inclusive 
neighborhoods of opportunity--binding communities to work together as a 
region so that they not only share problems, but solutions as well. If 
you asked Dan Kildee, who was Genesee County Treasurer for many years, 
he'd tell you sustainability is about the very economic survival of a 
city like Flint, Michigan--where years of population loss and economic 
decline have left a surplus of housing and more vacant land than can be 
absorbed by redevelopment. For Flint, sustainability is about being 
smaller but stronger and smarter.
    And so, the Federal role within each of these efforts is clear: not 
to dictate what localities can and can't do or how to do it, but rather 
offering them the resources and tools to help them realize their own 
visions for achieving the outcomes we all want: less time commuting and 
more time with family, neighborhoods where kids can play outside and 
breath clean air, and communities with opportunities for people of all 
ages, incomes, races and ethnicities.
    Partnering with communities so they can make choices that work for 
them--for their needs, and their marketplaces--is an example of what I 
would call a ``New Federalism'' that President Obama is proposing--and 
it's something we are committed to practicing at HUD.

 LAYING THE FOUNDATION--RECOVERY ACT INVESTMENTS IN SUSTAINABLE HOMES 
                            AND COMMUNITIES

    HUD has played a key role in implementing the Recovery Act, which, 
according to the Council of Economic Advisors, is already responsible 
for putting about 2.5 million Americans back to work, putting the 
Nation on track to create or save 3.5 million jobs by the end of the 
year.
    HUD has now obligated 98 percent of the $13.6 billion in Recovery 
Act funds stewarded by the Department--and disbursed over $3.9 billion. 
Nearly all of HUD's Recovery Act funding is fully paid out, or 
expended, only once construction or other work is complete--just as 
when individual homeowners pay after they have work done on their 
homes. Therefore, HUD's obligated but not yet expended funds are 
already generating jobs in the hard hit sectors of housing renovation 
and construction.
    While our top priority with Recovery Act funds is creating jobs and 
economic activity, we are also seizing the opportunity to lay a 
foundation for HUD's new direction in our Recovery Act investments. 
When President Obama signed the Recovery Act into law last year, it was 
designed to do three things: create jobs, help those harmed by the 
economic crisis, and lay a new foundation to make America competitive 
in the 21st century. By putting people back to work greening homes in 
cities like Philadelphia and building high-speed rail in places like 
Milwaukee and Madison, this administration is using our response to the 
economic crisis as a catalyst to build good neighborhoods, more 
resilient communities, and the strong, interconnected regional 
backbones our economy needs to create and sustain these jobs.
    Nearly one-third of HUD's Recovery Act funds can be used for 
``greening'' America's public and assisted housing stock, making homes 
healthier and more energy efficient. At the same time, this investment 
will prepare a new generation of professionals, from mechanics and 
plumbers, to architects, energy auditors, and factory workers building 
solar panels and wind turbines, all of whom are needed to design, 
install, and maintain the first wave of green technologies.
    These investments include:
  --$600 million for energy retrofits of 226 public housing 
        developments and 35 more green newly constructed and 
        substantially rehabilitated public housing developments.
  --$500 million for housing on Native American lands, which HUD is 
        encouraging and supporting tribal housing groups to provide in 
        an environmentally sustainable manner.
  --$250 million for green retrofits of 16,600 units of privately owned 
        HUD-assisted housing. (HUD received applications for more than 
        $700 million.)
  --$100 million to eradicate lead paint and create healthy homes.
    Importantly, energy efficiency and other environmental criteria--
and results--are also present in larger HUD programs funded by the 
Recovery Act, such as $3 billion in formula funding for public housing 
and $2 billion through the Neighborhood Stabilization Program.
    The Recovery Act investments we are making to help families and 
communities save energy and live in healthier homes are teaching us 
what works and how we can be a more effective partner to builders, 
owners and residents who want the opportunity to live in greener 
communities. These lessons and feedback from our partners are informing 
and improving our continuing efforts to increase environmental 
benefits, lower costs, and measure the benefits in affordable housing.

 BUILDING THE FRAMEWORK--HUD'S SUSTAINABILITY PARTNERSHIPS WITH OTHER 
                                AGENCIES

    Creating more sustainable housing and communities at scale--making 
sustainability the ``default option'' for our partners and the people 
we serve--requires an interdisciplinary approach and intense 
collaboration across the traditional silos of Federal policy. That is 
why we are so pleased to be working closely with a number of Federal 
agencies to leverage the skills, resources and partnerships that each 
can bring to truly transforming our built environment.
    As you know, HUD, the Department of Transportation (DOT) and the 
Environmental Protection Agency (EPA) have formed the Interagency 
Partnership for Sustainable Communities to help improve access to 
affordable housing, expand transportation options and lower 
transportation costs while protecting the environment in communities 
nationwide. Through a set of guiding Livability Principles and a 
partnership agreement that frames our collective efforts, the 
partnership is coordinating Federal housing, transportation, and other 
infrastructure investments to an unprecedented extent to protect the 
environment, promote equitable development, and help to address the 
challenges of climate change. When it comes to housing, environmental, 
and transportation policy, it is time the Federal Government spoke with 
one voice. (The Livability Principles are attached as Appendix A.)
    Having served in, and worked with, various levels of government for 
many years, I can say that the extent of collaboration and cooperation 
among our agencies has been nothing short of remarkable--starting at 
the senior leadership level where Secretary LaHood, Administrator 
Jackson and I have developed an excellent working relationship, and 
extending to the staff in each agency. Every day, we are getting better 
at aligning where it makes most sense and assigning specific 
responsibilities to the appropriate agency based on resources and 
expertise. One example was DOT's inclusion of HUD and EPA in the review 
of competitive applications for DOT's $1.5 billion TIGER Grant program 
funded under the Recovery Act. We would by no means suggest that we 
have perfected the collaborative approach. Decades of statutes, 
regulations and habits, in some cases, create real challenges to the 
partnership results all three of our agencies aspire to achieve. But 
the good news is we are making consistent progress, moving forward 
despite the barriers, and we always welcome ideas and assistance from 
interested parties, including this subcommittee.
    Another exciting example is the partnership between HUD and the 
Department of Energy that is working to increase energy efficiency in 
affordable homes and apartments. One joint project is to develop a 
streamlined, low-cost, consumer friendly tool to provide homeowners 
with better information about their home's energy use, options for 
saving energy, and the cost savings that would result. We are also 
exploring options for providing financing for consumers to pay for the 
cost of energy saving home improvements, described more below.
    HUD's partnership with DOE is delivering results in multi-family 
low-income housing as well. Our agencies have worked together to 
eliminate duplicative and unnecessary rules that impeded the use of 
Federal Weatherization Assistance Program funds to retrofit multi-
family properties. Thousands of low-income families are now in better 
position to benefit from the $5 billion in weatherization funds 
provided under the Recovery Act as a result.
    For instance, Rhode Island's Office of Energy Resources, has 
allocated $7 million to weatherize multi-family housing--this set aside 
was in response to the HUD/DOE MOU published in May of last year. Rhode 
Island anticipates a large number of applications for this program.
    Colorado is allocating $80 million for its weatherization program. 
GAO and IG reports have identified Colorado as a high performing State. 
Currently, about $30 million of the ARRA funding has been expended to 
weatherize multi-family homes throughout the State.
    In addition, I have appointed Deputy Secretary Ron Sims to 
represent HUD on the Steering Committee for the White House Council on 
Environmental Quality, the Office of Science and Technology Policy, and 
the National Oceanic and Atmospheric Administration interagency process 
to produce a set of recommendations for Federal actions that will help 
society adapt to climate change. This group is developing 
recommendations on how Federal agencies can effectively create and 
implement climate change adaptation policies and strategies.
    Other similar partnerships are in formation or early development. 
We are especially optimistic about potential collaboration with the 
Department of Agriculture to ensure we are as effective in helping 
deliver sustainability solutions in rural areas and small towns as we 
are in larger and more urban communities.

     ENSURING HUD'S LONG TERM LEADERSHIP ON SUSTAINABLE HOMES AND 
                              COMMUNITIES

    Thanks to this subcommittee's support, we have created a new office 
that will ensure that the foundation laid by our Recovery Act 
investments, and the framework we are building in partnership with 
other agencies, is buttressed and built upon by institutionalized 
capacity within HUD. The Office of Sustainable Housing and Communities, 
under the direct supervision of Deputy Secretary Sims, will help 
provide and expand that capacity among HUD staff and stakeholders.
    Shelley Poticha, nationally recognized for her leadership to create 
more location efficient communities, is in place as Director of the 
office and we have begun to assemble a talented team that brings the 
technical skill sets and deep commitment our sustainability initiatives 
demand. Just as important, we are creating teams of staff in HUD's 
regional and field offices to serve as partners and points of contact 
with stakeholders in our sustainability agenda, listening to local 
ideas and delivering HUD's solutions in real time. Staff playing these 
roles will be current HUD employees who are trained in additional 
skills and work with their colleagues from DOT, EPA and other agencies 
in our communities.
    The office has already made significant progress advancing several 
new initiatives totaling $200 million. This subcommittee's early 
support for these initiatives will be key to their ultimate success. 
First is the Sustainable Communities Regional Planning Grant Program, 
which will provide a total of $100 million to a wide variety of multi-
jurisdictional and multi-sector partnerships and consortia at the 
regional level, from Metropolitan Planning Organizations and State 
governments, to non-profit and philanthropic organizations and another 
$40 million to foster reform and reduce barriers, at the local level, 
to achieve affordable, economically vital and sustainable communities. 
These grants will be designed to encourage regions and local 
jurisdictions to build their capacity to plan for integration of 
economic development, land use, transportation, and water 
infrastructure investments, and to combine workforce development with 
transit-oriented development. Second is the $50 million Energy 
Innovation Initiative to enable the Federal Housing Administration 
(FHA) and the Office of Sustainable Housing and Communities to catalyze 
innovations in the residential energy sector that can be replicated and 
help create a standardized home energy efficient retrofit market. 
Finally, another $10 million is set aside for research on a 
transportation/housing affordability index. I will discuss these 
initiatives in greater detail below.

Sustainable Communities Regional Planning Grants
    For the first time ever, we will provide Federal money to support 
planning grants that will be selected not only by HUD, but also by DOT 
and EPA--because when it comes to housing, environmental and 
transportation policy, it's time the Federal Government spoke with one 
voice.
    As indicated above, the first $100 million in funding is for 
regional integrated planning initiatives through a Sustainable 
Communities Planning Grant Program. The goal of the program is to 
support multi-jurisdictional regional planning efforts that integrate 
housing, economic development, and transportation decisionmaking in a 
manner that empowers communities to consider the interdependent 
challenges of economic growth, social equity and environmental impact 
simultaneously. We are committed to encouraging these regions to engage 
residents and other local stakeholders to build long-lasting alliances.
    HUD recognizes that while the core principles of the program are 
not new, the Federal Government has never attempted to directly support 
local leaders in articulating and realizing them. In recognizing that 
we can learn from our leaders on the ground, we issued an Advanced 
Notice and Request for Comment for the program. We invited feedback 
through a new online ``Wiki'' accessible via HUD's Web site 
(www.hud.gov/sustainability) and through an extensive listening tour 
around the country. We want communities to tell us what works, what 
doesn't work, and how we can build sustainably. Just as importantly, we 
hope to send a very important signal that we in the Obama 
administration are serious about being the kind of partner that listens 
and learns.
    We received over 900 written comments, met with over 1,000 
stakeholders in 7 listening sessions, and staged web casts that touched 
thousands more. The feedback we received was overwhelmingly positive--
from the mayors and other elected officials of both small and large 
communities, to business leaders in growing regions, to Governors of 
States that have been hit hard economically.
    One example of how this feedback changed our thinking is with 
respect to small towns and rural areas. The White House convened a 
special focus group to discuss the needs of such communities. In those 
sessions, we heard concerns that larger communities and central cities 
would receive preference for these funds despite the great need in 
rural America.
    Indeed, Madam Chairwoman, while rural communities generally do not 
have access to public transportation, at HUD we recognize that these 
residents still face unique challenges when it comes to accessing 
healthcare, grocery stores, adult education opportunities, among other 
things. We are very much aware that there are high rates of poverty and 
inadequate housing in rural areas.
    That is why we are looking at creating a separate, special funding 
category for small towns and rural places as we prepare the Notice of 
Funding Availability (NOFA) for the fiscal year 2010 Sustainable 
Communities Regional Planning Grant funds--and, indeed, are 
incorporating many of the ideas submitted to us.
    HUD formed an interagency team to draft the NOFA. This team 
included deep engagement from staff within the Federal Transit 
Administration and Federal Highway Administration within DOT; EPA's 
Brownfields, Water, and Smart Growth offices; all of HUD's key program 
offices; the Office of Management and Budget; and the Domestic Policy 
Council within the White House.
    We also consulted with the Department of Agriculture, the Federal 
Emergency Management Agency, the Department of Education, and the 
National Endowment for the Arts. Our fiscal year 2010 NOFA is now in 
clearance. Applicants will be given at least 60 days to submit 
proposals. With DOT and EPA, we aim to announce approximately 40 
winners--from small and rural areas, mid-sized regions, and large 
metropolitan areas.
    The $100 million investment from this fund could potentially be 
game-changing and will leverage additional public and private dollars. 
We will also be working hard and listening closely to ensure it is 
truly useful for rural and smaller communities, as well as larger ones. 
The program is designed to address the needs of places that are just 
starting to think about more sustainable growth and development, as 
well as those that are more advanced. Congress has directed us to share 
our plans for the entire Sustainable Communities Initiative and we will 
submit a formal report on our plans to the subcommittee.
    Finally, as briefly noted above, with $10 million of the Office of 
Sustainable Housing and Communities' budget, we are working with the 
Department of Transportation and the Environmental Protection Agency to 
develop an Affordability Index to educate consumers who want to buy 
homes in more sustainable places by accounting for that housing's 
proximity to jobs and schools. Congressman Blumenauer is preparing 
legislation on this subject and we look forward to continuing to 
discuss this proposal with him going forward.

Community Planning Challenge Grant Program
    HUD's fiscal year 2010 budget provided $40 million to support the 
detailed planning and code reform efforts that cities and counties must 
undertake to realize their sustainability goals. Consistent with the 
administration's intent to be more transparent and ``user-friendly,'' 
HUD has chosen to issue a joint NOFA with DOT for its ``TIGER II'' 
planning grant program (up to $35 million.) This NOFA will be published 
at the same time that DOT publishes its TIGER II Capital Grants NOFA. 
The key difference between the DOT planning grant program and HUD's 
Community Planning Challenge Grant program is in the types of 
activities that could be funded. DOT's program funds planning 
activities that relate directly to a future transportation capital 
investment, while HUD's program funds land-use related planning 
activities that would be linked to a future transportation investment. 
HUD and DOT will jointly develop selection criteria that will apply to 
all proposals submitted in response to the joint NOFA and will jointly 
review the proposals.
    DOT and HUD believe there is great value in aligning the two 
planning programs in order to create synergies between transportation 
and land use planning and to set the stage for future linkages between 
the three Partnership agencies' various programs. Furthermore, we 
believe this proposal has the potential to encourage and reward more 
holistic planning efforts and result in better quality projects being 
built with Federal dollars.

Energy Innovation Grants
    Another area where the Office of Sustainable Housing and 
Communities is focused is scaling up energy efficiency in affordable 
housing. Our fiscal year 2010 appropriation includes $50 million for an 
Energy Innovation Fund. Pursuant to Congress' direction, we are 
developing new and innovative low-cost financing for single- and multi-
family programs, including taking an Energy Efficient Mortgage product 
to scale that would allow homeowners to wrap energy improvements into 
property tax assessments where the up-front cost can be amortized.
    In both cases, our aim is to use these Federal funds to pilot 
approaches that FHA and the private sector financial institutions will 
take to greater scale in the market.
    Under the leadership of the Office of Sustainable Homes and 
Communities, HUD has also launched a transformative program to develop 
uniform investment policies, performance goals, and reporting and 
tracking systems to support national objectives for energy efficiency. 
HUD is working together with DOE to support the achievement of the 
President's goal of weatherizing 1 million homes per year by enabling 
the cost effective energy retrofits of a total of 1. 2 million homes in 
fiscal year 2010 and fiscal year 2011. As part of this initiative HUD 
intends to complete cost effective energy retrofits of an estimated 
126,000 HUD-assisted and public housing units during this time.
    As we are developing new approaches to the Energy Efficient 
Mortgage, we are also exploring the potential for Location Efficient 
Mortgages (LEM's). LEM's take into account the lower costs of 
transportation in transit rich, walkable communities. This is part of a 
larger effort that HUD is considering housing affordability through the 
lens of the combined costs of housing (including utility costs) and 
transportation, rather than looking at them separately. This work, 
while early in the research and development stage, holds significant 
promise. These efforts are motivated by a belief that markets work best 
when there is reliable and useful information for consumers and 
communities alike--and that by making information on utility and 
transportation costs widely available, we can drive a much broader 
scale of change than Government ever could alone, ensuring that we 
never again foster a culture of ``Drive to Qualify.''
    As you know, we are requesting $150 million for the second year of 
the Sustainable Communities Initiative. Additionally, Senator Dodd and 
Rep. Perlmutter have introduced legislation that would make some of our 
initiatives permanent, and we will work in consultation with the two 
authorizing committees as the legislative process moves forward. 
Working closely with this subcommittee and the authorizing committee, 
we would use these funds for the following:
  --A second round of Sustainable Communities Planning Grants 
        administered by HUD in collaboration with DOT and EPA. As 
        described above, these grants will catalyze the next generation 
        of integrated metropolitan transportation, housing, land use 
        and energy planning using the most sophisticated data, 
        analytics and geographic information systems. Better 
        coordination of transportation, infrastructure and housing 
        investments will result in more sustainable development 
        patterns, more affordable communities, reduced greenhouse gas 
        emissions, and more transit-accessible housing choices for 
        residents and firms.
  --Additional investment in Sustainable Communities Challenge Grants, 
        also as described above, to help localities implement 
        Sustainable Communities Plans they will develop. These 
        investments would provide a local complement to the regional 
        planning initiative, enabling local and multi-jurisdictional 
        partnerships to put in place the policies, codes, tools and 
        critical capital investments needed to achieve sustainable 
        development patterns.
  --The creation and implementation of a capacity-building program and 
        tools clearinghouse, complementing DOT and EPA activities, 
        designed to support both Sustainable Communities grantees and 
        other communities interested in becoming more sustainable. 
        HUD's focus will be on buttressing the capacity of land use and 
        housing stakeholders, while DOT will focus on building capacity 
        and providing tools for transportation professionals. EPA will 
        bring their decade-long expertise in technical assistance and 
        research to the Partnership.
  --A joint HUD-DOT-EPA research effort designed to advance 
        transportation and housing linkages at every level where our 
        agencies work together.
  --All three agencies will collaborate on providing guidance to fiscal 
        year 2011 Sustainable Communities grantees to assist them to 
        implement their projects and programs.
    I also would like to say a word about the various roles of the 
three agencies within the interagency partnership. Each agency has 
clear and defined roles: HUD will take the lead in funding, evaluating, 
and supporting integrated regional planning for sustainable 
development, and will invest in sustainable housing and community 
development efforts. DOT will focus on building the capacity of 
transportation agencies to integrate their planning and investments 
into broader plans and actions that promote sustainable development, 
and investing in transportation infrastructure that directly supports 
sustainable development and livable communities. EPA will provide 
technical assistance to communities and States to help them implement 
sustainable community strategies, and develop environmental 
sustainability metrics and practices. The three agencies have made a 
commitment to coordinate activities, integrate funding requirements, 
and adopt a common set of performance metrics for use by grantees.
    Allow me to explain to the subcommittee how our interagency 
collaboration--and your support--is already producing results. In the 
first round of DOT's TIGER grant program under the Recovery Act, DOT 
awarded $25 million for the Woodward Avenue streetcar project in 
Detroit. Both HUD and EPA brought critical information and perspectives 
to the table when the three agencies reviewed Detroit's application. 
HUD was able to bring to DOT's attention community development 
activities already planned or underway in the Woodward Avenue corridor. 
EPA was able to highlight Brownfield remediation efforts in the 
vicinity of the project which will allow abandoned properties along the 
streetcar line to be ``recycled'' for economic development and 
affordable housing. In the past, DOT would not have had access to this 
information and a project with so much promise might not been selected.
    This is a prime example of how I believe, Secretary LaHood 
believes, and President Obama believes, Federal agencies must begin to 
partner with one another to make the biggest possible impact on the 
ground.
    Finally, I want to say that with our Choice Neighborhoods 
demonstration, which will be soon underway, HUD will be aiming to prove 
that neighborhoods can be a platform for a new kind of sustainability--
bringing to bear private capital and mixed-use, mixed income tools to 
transform all housing in a neighborhood.
    But creating true neighborhoods of choice--where lower-income 
families can find opportunity and higher income families would choose 
to live, for their location, their uniqueness, and their amenities--
requires we bring HUD's fair housing policies, which have remained 
largely unchanged since the Fair Housing Act was passed in 1968, into 
the 21st century. With consultation from Ron Sims, HUD's Assistant 
Secretary of Fair Housing and Equal Opportunity, John Trasvina, is 
adopting a broader definition of fair housing that includes not only 
the racial makeup of housing, but also its orientation to opportunity--
to public transportation and job centers.
    Armed with this broader set of criteria with which we can better 
understand segregated development patterns, HUD can not only help 
communities identify longstanding demographic and development 
challenges with new technologies such as geospatial data analysis--more 
importantly, we can help them with new development strategies and 
targeted technical assistance. This is not just enforcement--but what 
the law calls ``Affirmatively Furthering Fair Housing.''
    Building on this direction, Deputy Secretary Sims and I have 
instructed Shelley to collaborate with Assistant Secretary of Community 
Planning and Development Marquez toward that end as we develop HUD's 
new Consolidated Plan.
    With housing-specific resources like vouchers, counseling and 
Choice Neighborhoods, to new financing tools for transit-oriented 
development, to incentives that encourage the repurposing of polluted 
land for affordable housing development, we can help communities 
coordinate the use of all available resources to turn segregated 
neighborhoods of concentrated poverty into integrated, healthy, 
sustainable communities.
    That is why I believe this office reinforces President Obama's 
commitment to ensuring all Americans have the opportunity to 
participate in real community change.

                               CONCLUSION

    My testimony today has focused largely on the work and agenda of 
HUD's Office of Sustainable Housing and Communities. We recognize that 
$150 million alone is not sufficient to meet the demand for sustainable 
communities. That is why I believe the real size of my sustainable 
budget is really $44 billion. That is the size of HUD's fiscal year 
2010 budget--and we intend to begin using every dollar of it to put 
more power in the hands of communities and more choices in the hands of 
consumers.
    These efforts are motivated by a belief that when you choose a 
home, you don't just choose a home. You also choose transportation to 
work and to school. You choose public safety for your children. You 
choose a community--and the choices available in that community. And I 
believe that our children's futures should never be determined--or 
their choices limited--by their zip code.
    We want to again express our deep appreciation for the 
subcommittee's support for this bold, and necessary, new initiative. As 
I say frequently, our ultimate goal is to harness the entire HUD budget 
as a force for creating greener homes and communities everywhere in 
America. We look forward to working with the subcommittee to advance 
that goal and I look forward to our continued progress through the 
proposals outlined in the fiscal year 2011 budget.

                               APPENDIX A

HUD-DOT-EPA Interagency Partnership for Sustainable Communities
            Livability Principles--June 16, 2009
    Provide More Transportation Choices.--Develop safe, reliable, and 
economical transportation choices to decrease household transportation 
costs, reduce our Nation's dependence on foreign oil, improve air 
quality, reduce greenhouse gas emissions, and promote public health.
    Promote Equitable, Affordable Housing.--Expand location- and 
energy-efficient housing choices for people of all ages, incomes, 
races, and ethnicities to increase mobility and lower the combined cost 
of housing and transportation.
    Enhance Economic Competitiveness.--Improve economic competitiveness 
through reliable and timely access to employment centers, educational 
opportunities, services and other basic needs by workers, as well as 
expanded business access to markets.
    Support Existing Communities.--Target Federal funding toward 
existing communities--through strategies like transit oriented, mixed-
use development, and land recycling--to increase community 
revitalization and the efficiency of public works investments and 
safeguard rural landscapes.
    Coordinate and Leverage Federal Policies and Investment.--Align 
Federal policies and funding to remove barriers to collaboration, 
leverage funding, and increase the accountability and effectiveness of 
all levels of government to plan for future growth, including making 
smart energy choices such as locally generated renewable energy.
    Value Communities and Neighborhoods.--Enhance the unique 
characteristics of all communities by investing in healthy, safe, and 
walkable neighborhoods--rural, urban, or suburban.

                        REGIONAL PLANNING GRANTS

    Senator Murray. Thank you very much to both of you for your 
testimony today.
    We will begin a round of questions, just so everybody 
knows, this is the Senate. We are going to have a vote here in 
a few minutes, apparently. So I will begin by asking my 
questions, and when the vote is called, I will turn it over to 
Senator Bond, and I will go and come back. So, hopefully, we 
can keep this moving.
    As we engage our stakeholders in discussions about the 
partnership for sustainable communities, it is really apparent 
that the terms ``sustainability'' and ``livability'' aren't 
easily defined. And the reality is, there isn't one type of 
sustainable or livable community.
    The administration has been clear that plans for 
sustainable communities will be locally driven, but at the same 
time as the subcommittee considers the administration's funding 
request, it is important to understand what types of projects 
will fit into these principles of livability developed as part 
of the interagency partnership.
    So, Secretary Donovan, let me start with you. What specific 
criteria is HUD going to be using to determine if regional and 
community plans meet the goals of sustainability?
    Secretary Donovan. I think there are a number of key things 
that we are looking for up front in the applications for these 
grants. And then I want to be clear, and I think you said this 
well in your opening statement, we need to make sure that this 
is about local efforts because one size doesn't fit all, but we 
also have to set clear standards for accountability and showing 
results.
    Those results will be dependent on the specifics of the 
local plan, but will include a range of outcomes like lower 
cost of living for households, including the combined costs of 
housing and transportation, lower infrastructure costs for 
communities as well. And what we will see as a result of that 
is more disposable income and more resources available at the 
State and local level available, as Secretary LaHood said, 
because we will be able to lower costs for infrastructure 
investment and other forms of investment.
    In terms of the criteria, we are looking for very clear 
regional partnerships in our regional planning grants. There 
must be evidence of collaboration among the various local 
jurisdictions that will be competing. We are looking for 
capacity to use and leverage funds effectively, and we are 
looking for real evidence of the capacity to do planning 
efforts, whether it is through direct capacity at the local or 
regional government level or whether it is with non-profit or 
other types of partners like regional planning organizations or 
councils of government that often play the lead function in 
these kind of planning efforts.
    Senator Murray. So I am hearing you say that you are more 
interested in the integrated planning process rather than the 
specific details?
    Secretary Donovan. I was talking about the regional 
planning grants. Those will be the key criteria. That is right.
    Senator Murray. Okay. And I am going to turn it over to 
Senator Bond because the vote has been called and let him do 
his questions, and I will come back and have a number of 
additional questions that I will ask.

                      NON-MOTORIZED TRANSPORTATION

    Senator Bond [presiding]. Thank you, Madam Chair, and thank 
you for your statements gentlemen.
    Secretary LaHood, I have a letter that I assume you have 
seen from the Transportation Construction Coalition dated--what 
was the date of this letter? We received it yesterday. Ah, 
Bella has kindly passed it up.
    These are the associations engaged in road building and the 
unions that engage in it. And I thought they raise some good 
questions. They state that any definition of ``livability'' 
must recognize that non-motorized transportation is a viable 
solution in certain areas, and in our major cities, we 
appreciate the support for mass transit.
    And I told you Columbia, Missouri, is the one city in the 
State that has really gone wild with bicycles. They love to 
bike, and they have theirs. But there are a lot of communities, 
good-sized communities that don't have public transportation, 
and it is too far to bike. And the conditions are not safe.
    And they are concerned that--another concern they have is 
that transportation goals and transportation policy is usually 
set in multiyear reauthorization bills. They are concerned that 
the proposal that takes $200 million out of the highway measure 
to put it in livability, as I think the chair mentioned, may 
reflect a view that we want to get rid of auto transportation.
    I don't know if this quote is accurate, but I have an 
article stating that last year at a National Press Club event, 
a panel moderator said--and some of the highway supporter 
motorists groups have been concerned by your livability 
initiative. He said is this an effort to make driving more 
tortuous and to coerce people out of their cars?
    And according to the article, you answered, ``It is a way 
to coerce people out of their cars.'' Is that an accurate 
reflection of what you said?
    Secretary LaHood. Well, first of all, I haven't seen the 
letter. I was in Houston yesterday.
    Senator Bond. Oh, okay.
    Secretary LaHood. And they didn't provide the courtesy to 
present the letter to me. So I don't have access to it.
    Senator Bond. It was addressed to us, and I thought----
    Secretary LaHood. Senator Bond, I have been all over the 
country. I have been to 80 cities. I have been to 35 States. I 
was in Houston yesterday, which probably has more highways 
maybe than any other place in the country. We had a meeting 
there around the authorization bill. It is our fourth meeting 
that we had.
    We have had one in New Orleans. We had one in Minneapolis. 
We had one in Los Angeles, and we had one in Houston 
yesterday--and nobody has more highways than Texas does.
    What I told those folks is what I have told people all over 
the country not only at these meetings, but everywhere I have 
gone. We have a state-of-the-art interstate system in America. 
We have very good roads, and at DOT, we have an obligation to 
maintain our roads to make sure they are fixed up. In places in 
the country where they need more capacity, we are for that. So 
the idea that we are giving up on our road program, or we don't 
care about it, or we don't care about our highways is nonsense.
    But I can tell you this. Wherever I go, people are sick and 
tired of being stuck in cars and in congestion. People want 
other alternatives. When we hear that, we feel an obligation, 
as the U.S. Department of Transportation, to help create the 
kind of opportunities that people want.
    In some communities, people want more transit. Now that can 
be light rail. It can be a bus. It can be a streetcar. 
Streetcars are coming back to America. In some communities, it 
can be a walking path or a biking path, and in some 
communities, it may be more capacity on an interstate, like 
they have done in Miami, where they put another lane right down 
the middle of the----

                           HIGHWAY TRUST FUND

    Senator Bond. Mr. Secretary, I am beginning to run short of 
time, and I have worked on all those things, and I have made--I 
have asked for grants for things like that, and we talked about 
the place-based green city in Kansas City. That is something 
that came from the bottom up, from the leaders of the community 
with the leadership of my good friend Congressman--and we call 
him Reverend--Emanuel Cleaver has been very strong on that, and 
I have supported that. That comes from the bottom up.
    Now a lot of these things, they all want money that most of 
it comes out of the Highway Trust Fund. And the Highway Trust 
Fund is strangled, and they want to know why we have got all of 
these non-motorized uses for highway--for the Highway Trust 
Funds when we have a lot of roads, a lot of areas that need 
better roads in Missouri.
    But the basic question I asked was this is a quote from the 
American Spectator, I guess April 19 of this year, talking 
about last year. Did you say at the National Press Club it's a 
way to coerce people out of their cars?
    Secretary LaHood. Yes sir.
    [The information follows:]

    I believe you are referring to a question that came up at a speech 
I gave at the Press Club in early 2009. The moderator asked if this was 
an effort to make driving more difficult and to ``coerce people out of 
their cars''. I said that it was, and that people already dread getting 
stuck in their cars in traffic for hours. My point was that people want 
to get out of their cars and it's our role to create those 
opportunities for people who want to use streetcars, bicycles, or light 
rail.

    Senator Bond. That is inaccurate? Well, I think a lot of 
people may see that and be very much concerned because----
    Secretary LaHood. Well, I have been quoted a lot of places 
around the country, Senator. There have been a lot of quotes 
that people have used. But I wish--and that is the reason that 
I----
    Senator Bond. Well, that is all right. I gave you the 
opportunity to answer it and say it wasn't--you didn't say 
that. So that is good.
    Secretary LaHood. No, but look----
    Senator Bond. You answered the question.
    Secretary LaHood. I have been to 80 cities in 35 States, so 
I have been quoted a lot. I have given a lot of speeches, and 
what I just told you is the accurate point of view from the 
Secretary of Transportation about our priorities. We have a 
state-of-the-art interstate system. We are not giving up on it. 
If people need more capacity, they will tell us that.
    Senator Bond. We are telling you that. We need it in 
Missouri----
    Secretary LaHood. I know you are telling me that, but I am 
also telling you what other people are telling me about other 
kinds of things they want in their community.

                           HIGHWAY TRUST FUND

    Senator Bond. Okay. Well, I will tell you something. Your 
basic responsibility is the core transportation needs, and we 
put money into the Highway Trust Fund, and taking it out for 
livability, sustainability, that is greeted with a minimum 
amount of high enthusiasm by the people who need the roads. So 
I think we all have the same goal. We all have the same goal to 
make sure that the communities in States around this country 
and areas that are too dispersed even to be considered a 
community, where people necessarily live and farm are part of 
and thriving parts of every State in the Union.
    And what I am concerned about is the focus that we--I know 
you like to bike, and I certainly want to respect bikers, but 
we need a lot of roads. And we are working on bridges, and we 
appreciate your coming to help get us another bridge across the 
Mississippi River. I had a battle on the floor with a good 
friend of mine who comes from a very dry State who didn't know 
why we were spending any highway dollars on a bridge.
    I said in your State, you don't need bridges. But if you 
live in Missouri and want to get to Illinois, you better have a 
bridge or a car with water wings. Now you were there to help us 
meet one of the top priorities. That was a priority identified 
by the leaders in the community, the people in the community.
    And that is what I'm saying. I'm saying these should come 
from the bottom up. And to the extent that we pay into the 
Highway Trust Fund, we need those dollars and we need more 
dollars in the Highway Trust Fund than we are able to put on 
the--lead on the target now.
    But let me go on to another question. Can you explain the 
difference between livability and the FTA's definition of 
transit-oriented development?
    Secretary LaHood. Well, Senator, let me, first of all, just 
say that this bottom-up idea, that is the reason I have been to 
35 States and 80 cities. I agree with that. The reason we go 
out to these places is so we can listen to people and hear what 
they have to say.
    In some places in the country, people do want more roads, 
and they want more capacity, and we feel at DOT that has to be 
part of our priority. I would say just as counter to--I know 
the Highway Trust Fund is set up out of the receipts that come 
from the gasoline tax. But I will tell you, sir, that when you 
all extended the program, twice now, and extended it through 
December, the $35 billion, almost $40 billion to pay for that 
came from the general fund----
    Senator Bond. Right.
    Secretary LaHood [continuing]. Which is taxes paid by all 
the taxpayers. So, the idea that we are trying to take Highway 
Trust Funds and use them for other things than highways--part 
of the money came from the general fund, which is paid for by 
all the taxpayers, who, in some instances, want something more 
than just roads. I just--I have to put that on the record.
    Senator Bond. We know that, and we need to have your 
recommendations for funding the Highway Trust Fund and also 
funding all the transportation needs. And when we get to 
electric cars, we are having more and more electric cars. That 
is good for the environment. It saves gasoline. It reduces 
imports. How are we going to make sure that the electric cars 
that are on the roads--and I happen to live in a small 
community which is assembling electric cars, and we believe in 
them.
    But how do you get the trust fund--how do you get the money 
into the basic high programs because these little supersized 
golf carts need to drive on highways, too? I hope you will have 
a recommendation for that.

                      TRANSIT-ORIENTED DEVELOPMENT

    Secretary LaHood. Well, let me answer your question about 
FTA and the criteria. We changed the criteria because almost 
from the first day that I appeared before any of these 
committees on the Senate side, every Senator would ask how come 
it takes 10 or 12 years to get a New Starts program?
    Because our criteria was very limited, and by expanding the 
criteria, we can shorten the period of time within which New 
Starts can begin and really give more communities more 
opportunities to really begin the kind of New Starts and 
transit that they want to do. That is the reason that we really 
wanted to change the criteria.
    Senator Bond. Well, one of the things that was most 
important, we worked very hard on the SAFE-T, and I happened to 
be the head of the subcommittee in EPW that worked on it. We 
put some streamlining in there to make sure that all of the 
relevant questions were asked and answered, but one time only 
because the cost of starting has been delayed so much and there 
is so much additional cost by all of the regulations, 
overlapping regulations that are added without considering 
reducing existing limitations.
    I hope that you will look at how you can streamline that 
to--they are telling me I have got one minute left on the vote. 
Oh, well. You win some. You lose some.
    But I hope that you will do that, and I am sorry I haven't 
had a chance to discuss with you, Mr. Secretary, some of my 
concerns about this. We will submit those for the record. And I 
guess it would be appropriate to say that the subcommittee will 
stand in recess until the return of the chair.
    And I thank you very much, gentlemen.
    Secretary LaHood. Thank you.
    Senator Bond. It is always enlightening. I am sorry, 
Secretary Donovan, we will have more of a chance to talk later.
    Thanks.
    Senator Murray [presiding]. I bet you are glad to see me 
back.
    Secretary LaHood. We are very glad to see you, Madam Chair.

                  METROPOLITAN PLANNING ORGANIZATIONS

    Senator Murray. I am glad to see you as well. Sorry for the 
pause and I appreciate both of you waiting for us. We are back 
in session again.
    Let me go right back to my questioning, and I wanted to 
turn to you, Secretary LaHood. As part of the fiscal year 2011 
budget, you have requested $200 million to increase the 
capability of metropolitan planning organizations, MPOs. Under 
this proposal, will you select those MPOs based on their need 
to improve their planning capabilities or their interest in 
livability projects?
    Secretary LaHood. Well, first of all, we think the MPOs 
play a very important role. In your absence, Senator Bond was 
talking about how these ideas need to bubble up from the 
communities. And we believe in that. And we believe that the 
MPOs are a very good mechanism to do that. As I said to Senator 
Bond, I have been to 80 cities in 35 States. We have held four 
hearings around the country around the idea of transportation 
policy tied into with our friends at HUD and EPA.
    What we are hearing from people is that we are always going 
to need roads, but there are lots of other things that 
communities want in terms of transportation. Some communities 
want light rail. Some want more buses. Some want to get into 
the streetcar business. Some want more walking and biking 
paths. So our decisions will be based on what bubbles up from 
the MPO.
    I think people recognize that we have a pretty good system 
of highways and roads around the country, and I think what the 
MPOs are going to be hearing about is other opportunities for 
transportation that can be tied into affordable housing. So, I 
think some of it will be based on what the MPOs have to say, 
but I think everybody knows now that livability and 
sustainability include not only roads, but they include a lot 
of other things, too.
    Senator Murray. But when you look at those proposals and 
you are evaluating them, are you looking at whether they have 
put in place good planning and are capable of doing that? Or 
are you looking more at whether it actually is livability?
    Secretary LaHood. I think we are probably going to look at 
it in terms of what their capacity has been to do the planning 
and to do it on a regional basis and incorporate a lot of 
different forms of transportation. In some instances, I think 
we will try to enhance their ability to do that.
    For example, in Houston yesterday, I talked to the mayor, 
and she is very concerned about how far a reach her MPO goes 
and who should be included and those kind of things. In some 
instances, MPOs do need some enhancement, and some more staff 
capability to try to incorporate livability not only in an 
urban area, but also there are great concerns about rural 
transportation and rural areas, and how do you incorporate 
their priorities?
    So I think we are going to be looking at the capability of 
MPOs, what their thinking is, and how we can really enhance 
their ability to carry out the agenda that the community wants.

                      SMALL AND RURAL COMMUNITIES

    Senator Murray. Okay. The idea of a sustainable or livable 
community sometimes doesn't resonate in some of our smaller or 
rural communities. The terms that are associated with concepts 
like ``increased density'' and ``congestion pricing'' and 
``transit-oriented development'' just don't resonate in small 
communities. But small and rural communities do need improved 
planning and need to address land-use issues, which is really 
actually why this subcommittee included a set-aside within the 
regional planning grants to support planning efforts in regions 
with populations of less than 500,000.
    Secretary Donovan, can you explain how HUD will make sure 
that smaller regions benefit from these grants and maybe give 
us some examples?
    Secretary Donovan. Sure. First of all, I think the set-
aside is very important. In fact, one of the things that we 
heard in the feedback that we got and the sessions we have done 
around the planning grants is that, in fact, 500,000 may be too 
large in some cases. And so, one of the things that we are 
looking at is finding ways to ensure we get even to smaller 
regions and communities beyond the 500,000.
    So I think that was a clear piece of feedback that we heard 
and one of the ways that we are looking at right now. I guess 
another thing I would say is I think you make a very important 
point about not painting livability with too broad a brush 
because it does vary so much by community. Secretary LaHood was 
just talking about how we need to listen to those local 
communities.
    One of the things we consistently hear around smaller towns 
and rural areas is for seniors in those communities, the 
difficulty of linking up housing with transportation options. 
And obviously, you are not going to put in a streetcar line or 
you are not going to have the same kinds of solutions, but 
there are very important transportation solutions like vans or 
other kinds of transit options that can be flexible in rural 
areas that are available particularly for seniors, and we have 
been looking at ways to link up housing to those kinds of 
efforts as well.
    So there are very specific things like that, examples like 
that that we have heard out of these sessions and that we are 
incorporating into the criteria that we will have for those 
smaller places, as well as implementing the set-aside and 
looking at ways to even to get to smaller places. So those are 
a few examples.

                 DATA COLLECTION FOR SMALL COMMUNITIES

    Senator Murray. Okay. Secretary LaHood, your proposal seeks 
to increase the capacity of MPOs by improving data collection 
and computer modeling capabilities. Oftentimes, those things 
work better for large communities with really complex 
transportation challenges. How will those grants benefit 
smaller MPOs and communities, or communities that don't have an 
MPO?
    Secretary LaHood. Well, we think there needs to be some 
reform to MPOs to make sure that in past instances where the 
rural communities have not been at the table, that they can be 
at the table, that their transportation, housing and other 
needs are really being addressed. There are a couple of 
programs that Secretary Donovan mentioned in which transit 
districts have established contracts with smaller communities 
where they do provide transportation services so people can 
make a doctor's appointment or go to the grocery store or go to 
some other opportunity that they want in a larger city.
    We are going to work with MPOs on the idea that there has 
to be the kind of outreach that incorporates transportation and 
other needs that people have in rural communities. We know that 
many people want to retire in the communities where they have 
raised their children, where they farmed, or where they have 
lived all their lives, and still have access to the larger 
metropolitan areas.
    So, we have funded in the past some transportation 
opportunities for some communities, but we really need to make 
sure the MPOs are taking these kinds of considerations into 
account when they are putting together their plans.

                       FUNDING FOR INFRASTRUCTURE

    Senator Murray. Okay. Well, most of the transportation 
planning is done by the MPOs. Elected officials sit on the 
boards of MPOs, but they are still different organizations than 
the State or local governments who actually fund transportation 
projects.
    Secretary LaHood, your planning grants mainly go to those 
MPOs, but State and local governments tell us they have huge 
backlogs of infrastructure needs, and the Federal Government 
needs to find a way to fund more of the transportation 
projects. And I think we all agree there is a tremendous need 
to invest in our Nation's infrastructure.
    So how do you address the concerns that are given to us by 
State and local governments who are trying to find a way to 
fund their infrastructure needs?
    Secretary LaHood. We hope that you all in Congress will 
consider the kind of opportunities that were presented to 
communities for direct funding through the TIGER program. We 
had $1.5 billion. We had $60 billion worth of requests. That 
$1.5 billion went directly to communities, directly to transit 
districts, bypassed other bureaucracies.
    When you get $60 billion worth of requests, which we did, 
you get a lot of creative ideas and a lot of good ideas. The 
reason there is such a pent-up demand is for the reason that 
you just said--because they have been overlooked by either a 
State government or a larger metropolitan area. We think this 
program worked very well, the way it was intended, to go 
directly to very creative ideas in communities that have been 
bypassed.
    So the MPOs also should incorporate elected officials. If 
there is a small town mayor, they ought to have a seat at the 
table and be a part of the planning process. I think there will 
be some debate about whether they have an equal voice or not, 
but the point is they ought to be at the table.
    The TIGER program worked well because it went directly to 
very creative ideas that have been bypassed for years.

                            CHALLENGE GRANTS

    Senator Murray. All right. Well, as I mentioned in my 
opening statement, cities across the country like Bellevue in 
my home State have already developed projects like the Bel-Red 
Road that really exemplify both of your efforts to build 
livable communities. Bellevue has already done its planning and 
permitting. So I want to hear from both of you on what you 
would tell Bellevue or other cities like that where they would 
now look for Federal funding for the next phase of Bel-Red Road 
or similar projects that have finished their planning and 
permitting processes.
    And Secretary Donovan, let me start with you.
    Secretary Donovan. And let me just build on the prior 
question as well. It is one of the reason we felt that having 
the challenge grants that would go directly to local 
governments were an important complement. We realized that, I 
think as Ray said, the regional component of this, making sure 
that the regional organizations, whether it is an MPO. In rural 
areas, there are many places where you have regional 
organizations that aren't MPOs, but there are other types of 
organizations that cut across.
    Those are important, but also we have to go directly to 
local governments for the kind of planning and implementation 
that is important as well. So I think we have a balanced 
approach that recognizes you have to work with both kinds of 
organizations.
    In this case that you are talking about, I think it is the 
Bel-Red project that is there, there are a couple of things I 
would say on the HUD side, and Secretary LaHood could talk 
about the DOT side. Specifically, what we often see with these 
kinds of projects is that they create the opportunity for 
significant new housing development.
    They create demand around the stops on a line like that. 
And the challenge grants, as well as the DOT TIGER II planning 
grants that we are looking at putting together in one 
application or one NOFA process, those could be used, for 
example, to do zoning studies and really build out all of the 
specifics around the development that would take place around 
those transit stops. That is one example of how specifically it 
could be used there.
    A second would be our CDBG funding, which could be used for 
street improvements or a range of supporting investments to the 
actual transit line. This is exactly the kind of synergy I was 
talking about with the Detroit investment that the TIGER grant 
was made there. So those are a couple of examples of the way 
what we can do through this sustainability partnership would 
support the kind of investment and planning that they have 
already done.
    Senator Murray. Okay. Secretary LaHood?
    Secretary LaHood. We think that the collaboration that we 
are doing will enable people to have affordable housing and 
affordable transportation, in some communities, it could be a 
streetcar line, in other communities, it could be light rail, 
in other communities, it will be transit through bus services.
    The collaboration enables not only other forms of 
transportation besides an automobile, but affordable housing 
along the way. We have been around the country and seen where 
this has worked very, very well. Where there is good planning, 
you can make it happen, and you can actually talk about livable 
neighborhoods. Then, really building on the whole livable 
community's idea, you create not only affordable housing and 
the amenities that go in neighborhoods, but also good 
transportation that goes along with it.

                       TRANSPORTATION INVESTMENTS

    Senator Murray. Okay. As both of you know, each State and 
local government has a different relationship with their MPO. 
In some cases, the plans are a valued part of the process. But 
in others, they are largely ignored. How can you be sure that 
investments in better planning will actually lead to better 
investments in transportation projects?
    Secretary LaHood. These MPOs have to be very inclusive. 
They have to include the rural areas.

                          SMALL TOWNS AND MPOs

    Senator Murray. So you will be looking at that?
    Secretary LaHood. Absolutely, small towns and the 
connectivity that can be created around the metropolitan areas. 
In the city of Denver, the mayor brought all of the suburban 
Denver area in, and collaborated with them on plans. Now they 
have one of the really unique transit plans in the country, 
which runs six transit lines into their Union Station, where 
there will be an Amtrak capability.
    So, you create the kind of capacity for people from the 
suburban areas, and you take their ideas about the mobility 
that they want around the urban area. It has to be very 
inclusive, and it has to include rural and suburban in the case 
of a city like Denver or even Chicago, which Mayor Daley has 
done the same thing and been very inclusive with the suburban 
area.
    So, you have a couple different systems: you have the metro 
system that delivers people from the suburban area into the 
city of Chicago, you have the Chicago Transit Authority, where 
people can get around there, and you have trains that go to the 
airport, and it is connected. This is the kind of thing that 
really needs to be done if you are really going to provide the 
kind of alternatives that people want.
    Senator Murray. Okay.

                          MEASUREMENT CRITERIA

    Secretary Donovan. I would just add to that I think in 
addition to the important work we will obviously do in 
evaluating these applications, are the plans credible? Is there 
real evidence of collaboration, as Secretary LaHood is talking 
about, across jurisdictional lines?
    I also think it is critical that we set up specific 
measurement criteria as a result of the process. Again, we are 
not going to impose a single set of criteria up front. That has 
to come from the ground up. But it is clear that having impacts 
like reducing costs of combined housing and transportation, 
reduction in----
    Senator Murray. So you will set that out up front, this is 
what we expect to see?
    Secretary Donovan. Exactly. To say, out of these 
applications, we are going to agree to a set of criteria. We 
want to see the criteria that you are proposing. We will work 
with you on those, and then we will agree to a set of metrics 
that will have to be met from the plan.
    And that way, everybody knows what success looks like up 
front. We are not going to dictate that, but we have to at 
least know that there is something to be accountable to.

                               LIVABILITY

    Senator Murray. Well, following on that, what changes would 
you expect to see from a community after it has developed this 
integrated plan? Do you see the community using Federal housing 
programs like CDBG or section 8 in a different way?
    Secretary Donovan. I certainly think that we will see lower 
costs, and that is in a range of different areas. I would hope 
that we would see lower commuting costs, which would also be 
able to bring down emissions as well. We would see families 
with more income available. And certainly, I would expect to 
see lower costs on the HUD side for the taxpayer as well.
    What we see with the investments we have made from the 
Recovery Act in greening our housing stock, typically we see 
those investments pay for themselves in 3 to 5 years. So any 
savings that go beyond that, and these are annual savings, is 
net savings to the taxpayer. So we certainly expect to see 
lower utility costs in the long term that will help on the 
budget side with, as you know, what we have seen under the 
recession, increasing costs in section 8 and other programs. So 
I think this is a significant advantage as well.
    Senator Murray. So I am assuming that one of the things you 
are looking at in proposals is, at the end of the day, does 
that community envision having lower costs as a result of their 
planning?
    Secretary Donovan. Absolutely. How we measure those costs 
may be different in different communities, but in just about 
every example that I have seen--urban, rural, different types 
of metro areas--we see that.
    We see more efficiency in infrastructure investment, and 
this is one of the things that I think is so important about 
these principles is where we have a community, whether it is 
because of brownfields or red tape from HUD is standing in the 
way of making investments in places that already have 
infrastructure, we should be able to achieve lower 
infrastructure costs because we can recycle, if you will, 
existing infrastructure that is there, improve it rather than 
having to have to continue to sprawl in ways that have negative 
impacts on families, but also on infrastructure cost.
    Secretary LaHood. Can I just say that as a result of the 
work that you have done, Madam Chair, this idea of these kinds 
of transportation opportunities coming from the grassroots up, 
the whole ferry service, which is very unique to your part of 
the world, and there probably aren't any--there are very few 
other places around the country like this. But that is an 
integral part of the transportation for people to get back and 
forth to work, to housing, or to schools or whatever.
    Those opportunities to create multimodal forms of 
transportation have to come from the ground up, have to come 
from the MPOs, and have to come from the idea that not one size 
fits all.

                       CAPACITY-BUILDING FUNDING

    Senator Murray. Okay. Let me turn to some questioning about 
the roles and responsibilities of the agencies.
    In last year's funding we provided to HUD for the 
Sustainable Communities Initiative, the administration has 
worked to clarify the roles that each agency is going to play 
in this partnership. And under those new defined roles, HUD is 
going to focus on integrated planning efforts and updating 
zoning codes. DOT is going to focus on capacity building. EPA 
will focus on administering technical assistance.
    Now I understand that those roles were established in part 
to avoid duplication of effort among the different agencies, 
and that is important. But I am concerned that when we make 
those distinctions up front, we just are reinforcing the old 
stovepipes.
    So, Secretary LaHood, can you provide some more detail on 
what you see as DOT's role in providing capacity-building 
funding?
    Secretary LaHood. Well, I don't know if there has been 
another time when three agencies, three big agencies of the 
Government have ever sat down at a table together and began 
discussions about how we were going to share resources, how we 
were going to collaborate. This is an extraordinary 
opportunity, I think, for the country as we get into an 
authorization bill, as we get into a transportation policy, as 
we try to provide affordable housing.
    We each have our expertise, and we have our resources. The 
point here is, we are willing to share our expertise and some 
of our resources if it can be brought to bear on affordable 
housing and where people want to live. We know what our role 
is, but obviously, we have expertise in transit, and we have 
expertise in highways, and we have expertise in other forms of 
transportation.
    But collaborating with where people want to live and have 
affordable housing, has not really ever been done before. So, 
we are going to bring our own expertise, and look at a holistic 
point of view, not from a sort of a tunnel vision that you 
build a road here and then you hope that maybe somebody will 
build some houses. Or you see some houses, and how people are 
really going to gravitate around these communities.
    I think the key point here is that we are really looking at 
it from a holistic point of view and coordinating and 
collaborating and getting good ideas from people who are in 
these communities.

                               HUD'S ROLE

    Senator Murray. Secretary Donovan, you are supposed to 
focus on planning, but it seems to me that planning is about 
capacity building. So maybe define for me better what you see 
your role as.
    Secretary Donovan. I think you raise a very important 
question, I think, about how we make sure that we are not 
duplicating roles because I think that a lot of the work that 
we have done to try to define clear roles is to make sure that 
we are not replicating expertise that Ray has in his agency, at 
HUD that we are not hiring more folks than we need or spending 
more than we need to spend in terms of making these happen.
    But also recognizing, as you said correctly, that the lines 
are not perfectly clear and if we try to make them too hard 
that we can end up replicating the silos, and I think it is the 
right balance to strike.
    Let me maybe use an example in what we are looking at with 
the planning grants that we have, our challenge grants. We 
looked at this, and we said, look, DOT has $35 million in funds 
that could be used for similar purposes, but not exactly the 
same. We are going to come together to evaluate, but we will be 
awarding these funds depending on the specifics of what that 
community needs.
    If it really is more of a transportation planning effort 
that is specifically around, say, a streetcar line or something 
like that or a ferry line or whatever it might be, Secretary 
LaHood's team would provide the funding there. We might provide 
the funding if it is more specifically, say, an inclusionary 
zoning effort or a transit-oriented development around there. 
And there may be examples, too, where we would both combine 
funding and provide them.
    In those cases, we are going to be providing some capacity 
building as well because we are going to be working so 
extensively with the regional planning organizations, the MPOs, 
and others. There is real expertise at Department of 
Transportation in doing that. That is why we felt it was 
appropriate for them to be the lead.
    They being the lead doesn't mean we wouldn't also provide 
technical assistance----
    Senator Murray. So you don't see that as the sole 
responsibility is going to be them?
    Secretary Donovan. It is not a sole, but it is making sure 
we understand who is leading and who is following. If there is 
a more specific issue, for example, around zoning codes, land 
use, those issues, we would step in. If there is a brownfields 
issue, obviously, EPA would step in and be able to provide the 
technical assistance.
    But really, the leadership and the greatest experience on 
this was in DOT. That is why we felt like on that technical 
assistance side, they ought to be leading that effort. I hope 
that clarifies it.

                     BARRIERS TO NEW STARTS PROGRAM

    Senator Murray. Yes, it does. And what I hear you saying is 
you are using your own expertise, you are sharing it, which is 
new, and you are not exclusively limiting yourself to your one 
area?
    Secretary Donovan. Right. And the biggest risk here, we 
don't want to reinvent the wheel----
    Senator Murray. Yes.
    Secretary Donovan [continuing]. Where we have that 
capacity. It is more cost effective, and that means we have to 
be in the same room and understand who is leading and who is 
following.

                           COST EFFECTIVENESS

    Senator Murray. Okay. All right, very good.
    Secretary LaHood, I wanted to talk with you, I was really 
happy to see your announcement in January that the Department 
is now going to consider other important factors in addition to 
cost effectiveness when it is evaluating new transit projects. 
Cost effectiveness is obviously important, but I am really 
happy to see a more holistic approach that also considers the 
potential impacts of congestion and the environment and the 
economy because we know all of that is important to the places 
where we live and want to make them more vibrant and 
sustainable.
    That announcement also highlighted the proactive steps that 
DOT and HUD can take to remove barriers that stand in the way 
of smart development, and I wanted to ask both of you today if 
you can tell me what your Departments are doing now to identify 
and eliminate obstacles that are within your power to change?
    Secretary LaHood. Well, by proposing changes rather than 
just using economic development, which is an important, 
obviously, criteria. But taking into consideration several 
other factors, we think we can speed up opportunities for 
funding of New Starts. Really, I think the main obstacle to 
really expediting New Start opportunities and providing funding 
for it was that we were encumbered by our own guidelines. 
Expanding the guidelines and taking other criteria in will 
shorten the time within which we can really make these 
allocations and approve these projects.
    In your absence, I told Senator Bond that the most common 
complaint that I heard at the beginning of my tenure was, why 
does it take 10 or 12 years to get a New Starts program going? 
Well, because of all the bureaucracy, I guess, and all the 
hoops that we were making people jump through.
    It is not that we are not going to be taking a careful 
look. We are going to be doing that, but we are going to be 
looking at other criteria, such as livability and 
sustainability and the environmental benefits of each. The 
economics are important, and they always will be. But there 
will be other things that we will look at, and I think it will 
speed up the process.
    Senator Murray. I am told there is a list available 
somewhere in the administration of the barriers that exist. Is 
that available? We have been asking for it for over a year now.
    Secretary LaHood. Well, it is available as far as I am 
concerned. We will see if we can get you a copy of it.
    [The information follows:]

    The Federal Transit Administration (FTA) has, in the past year, 
rigorously examined each stage of the project development of New and 
Small Starts and implemented measures in an effort to make the process 
move more smoothly and quickly. FTA has revised its internal business 
practices and policies as well as the regulatory framework of the New 
and Small Starts program to expedite project delivery.
    A number of significant improvements have been made. A major change 
occurred in January 2010, when Secretary LaHood rescinded the test 
established in 2005 requiring New and Small Starts projects to have a 
Medium or better Cost-Effectiveness rating to be considered for a 
funding recommendation in the President's annual budget. Consideration 
for project funding recommendations are now available to projects that 
achieve a Medium or better Overall rating, as required by statute. 
Cost-Effectiveness no longer trumps all the other statutory evaluation 
criteria. Project funding recommendations are now based on the full set 
of statutory criteria, including ``livability'' criteria like 
environmental benefits and economic development effects. This change is 
expected to expedite the project development process because it removes 
the need for project sponsors to repeatedly rescope projects to lower 
their costs in an effort to meet a Medium cost effectiveness threshold.
    To provide better technical support to applicant project sponsors 
as they advance toward construction funding, FTA issued new and 
clarified guidance. FTA also works with sponsors to develop 
``roadmaps,'' mutually developed action time lines for advancing 
projects.
    FTA revised its organizational structure by creating an office 
solely devoted to New and Small Start project development and by 
revitalizing its New Starts project development teams that work one-on-
one with applicant sponsors. FTA reduced the number of submittals 
required from sponsors. FTA introduced streamlining policies such as 
allowing project sponsors to automatically move forward with certain 
procurement and early construction activities, using local funds 
eligible for later Federal reimbursement upon compliance with 
environmental requirements.
    Of particular note, FTA has just issued an Advanced Notice of 
Proposed Rulemaking (ANPRM) effort to improve and simplify the 
methodology used to measure three important criteria used to evaluate 
New Starts projects. During this ANPRM effort and subsequent 
development of a new regulation, FTA will work with a broad range of 
stakeholders in public transportation and livable communities to make 
the New and Small Starts regulatory framework not only reflect a wider 
range of the benefits of transit, but to be more compatible with 
expedited project development timeframes.
    With those accomplishments behind us, the FTA also expects to 
announce a significant revamping of its project approval processes in 
the coming months to further streamline the project decision process 
and shorten the period it takes to advance projects to a Federal 
funding decision.

    Senator Murray. Okay. We would like that, all right. 
Secretary Donovan.
    Secretary Donovan. I think this is such an important 
question, and it goes back a little bit to the issue that was 
raised before. Is the Federal Government dictating, absolutely 
not. We want to work with local communities.
    One of the things we consistently hear from local 
communities, and I think in some ways is our first 
responsibility, is the Hippocratic Oath, which says ``first, do 
no harm,'' and I think that is a principle we need to follow on 
this side as well.
    One of the great benefits of us coming together in the way 
that we have and reaching out to local communities is that we 
have heard a lot about where our rules--Ray talked about some 
of them, where our rules stand in the way of sustainability at 
the local level. In fact, I am not sure which list exactly you 
might be referring to. We have a list of 300 comments we have 
gotten from our input around the country that is barriers we 
ought to try and work on.
    Senator Murray. Okay.
    Secretary Donovan. We have begun to work on those. Let me 
give you just two quick examples. Let me just give you two 
quick examples of the things that we have started to work on 
already and the things that we have done.
    One of the things we have consistently heard is that our 
standards, both for ensuring multifamily buildings or 
subsidizing them require outdated environmental reviews that 
are not state-of-the-art and often limit how much commercial 
income a property could have. Well, what are the effects of 
that?
    We make it way too hard to reinvest in existing communities 
that might be close to transit or other things, and we stand in 
the way of doing mixed-use development, which is key for 
livable communities. So that is one example.
    A second, by working with--and we have changed that, by the 
way. We have now begun to incorporate state-of-the-art 
environmental standards into the work that we do.
    A second example is with the Department of Energy. As we 
started to look at their weatherization funding and whether it 
could be used on multifamily, what we found was the Department 
of Energy partners had to go literally family by family and 
check their incomes to make sure that they were low income, 
even though HUD is already doing that work each and every year 
to check their incomes.
    It was a big barrier to doing it. So what did we do? We 
changed it. We put out an MOU with Secretary Chu that says here 
is a list of 1.5 million apartments in HUD programs that are 
automatically eligible for weatherization assistance because of 
the income level.
    Those are just two examples of the kind of barriers that we 
have identified already and moved on. And obviously, there is a 
significant list of others that we have heard feedback from 
that we are beginning to work on as well.
    Senator Murray. Okay. If you could share that with the 
subcommittee, it would be great. My understanding is there is a 
joint list developed by DOT and HUD, and if you could share 
that with us and some of the ones that have been removed or 
what the challenges are, I would really appreciate it.
    Secretary Donovan. Yes.
    Secretary LaHood. Can I just list for the record the six 
criteria--you know I mentioned cost effectiveness in the past, 
but we have mobility improvements, environmental benefits, cost 
effectiveness, operating efficiencies, economic development 
effects, and public transportation supportive land use. That is 
the expansion that I was talking about, in addition to cost 
effectiveness.
    Senator Murray. Okay, very good.
    Well, I appreciate both of your responses to this and look 
forward to working with you on that.
    Secretary LaHood, I have one other question for you that is 
not about sustainable communities, but that is very important 
to me. And we will have a number of Senators who will be 
submitting questions to both of you.

                             MEXICAN TRUCKS

    And Secretary LaHood, I do need to ask you an important 
question. It is one I brought up with you when you were before 
our subcommittee before, and that is about the cross-border 
trucking issue with Mexico and the devastating effect of 
Mexican tariffs on my Washington State farmers now.
    Back in March, I urged you and the administration to move 
quickly to craft a plan to resume this cross-border trucking in 
a way that would address the safety concerns that were raised 
during the pilot and the tariffs that are imposed right now. 
You told me at that time that a resolution was going to be 
forthcoming soon.
    You should know and I want you to know that the effects of 
that Mexican tariff have been absolutely devastating to the 
farmers and families in my home State now. The tariffs are 
really undermining our farmers' competitiveness. They are 
killing jobs, devastating communities.
    In fact, in the 2 months since we last talked and you came 
before the subcommittee, the ConAgra potato processing plant 
that is located in Prosser, Washington, shut down and 
eliminated hundreds of really good-paying jobs. If we don't 
address this soon, that is just going to be the first of what 
we see. We literally have thousands of jobs at stake and are in 
serious jeopardy over this.
    I sat down last week with the Mexican ambassador to the 
United States in my office because I wanted him to know how 
harmful this was, and I told him that I feel very strongly that 
our Washington State farmers and our families should not be 
punished for a diplomatic dispute they had nothing to do with.
    Well, he told me that Mexico's president, as you know, is 
planning to be here in a few weeks and is bringing this issue 
up with President Obama. So my question to you this morning is 
I want to know what you can tell me about the administration's 
progress toward fixing this problem, are you prepared to 
resolve this issue with Mexico during the state visit later 
this month?

                         CROSS BORDER TRUCKING

    Secretary LaHood. Well, since the program was suspended, we 
have worked very hard with the White House and other members of 
the Cabinet, President Obama's team has worked very hard to put 
a proposal together. We will be announcing it very soon, and we 
will come to Capitol Hill and brief every Senator that has an 
interest in what it says and get feedback.
    President Obama's administration's intention is to restart 
this program. It is a part of NAFTA. It needs to be restarted. 
We believe if it is restarted that these tariffs will be 
lifted, which we know have had a devastating effect not only on 
the State of Washington, but on many other States across the 
country.
    We are very close to briefing you and other Senators on the 
proposal----
    Senator Murray. Is ``very close'' sooner than ``soon?''
    Secretary LaHood. It is closer than ``soon.''
    Senator Murray. Okay. Well, this is extremely important to 
us. So I will stay in touch with you on this.
    Secretary LaHood. Yes.
    Senator Murray. And we are hoping with the President coming 
later this month that we can have a resolution of this and move 
on.
    Secretary LaHood. Yes. Thank you.
    Senator Murray. Okay. Thank you.

                     ADDITIONAL COMMITTEE QUESTIONS

    I would ask at this time that if the subcommittee members 
have any additional questions that they submit them for the 
record.
    [The following questions were not asked at the hearing, but 
were submitted to the Department for response subsequent to the 
hearing:]

               Questions Submitted to Hon. Shaun Donovan
           Questions Submitted by Senator Christopher S. Bond

                              TRANSPARENCY

    Question. Secretary Donovan, as discussed during this and previous 
hearings, I am still waiting for real transparency in the current 
administration grant making process: in other words, at a minimum, 
Congress and the American people need to know the substance of the 
implementation of the program and the decisionmaking through the 
Internet or the Federal register, including such information as the 
basic requirements for receiving a grant, a list of all grants awarded, 
to whom and for how much, and what were the requirements that the 
grantee met in order to qualify for a grant, how the grant was awarded 
(who made the decision, under what basis), what are the minimum 
expectations, and a bi-annual review of the status of each grant 
including what has been accomplished in contrast to the benchmarks 
established for a successful grant, and what benchmarks apply for the 
length of the grant, including in all cases the rate of obligation and 
the rate of expenditure and whether the expenditures are consistent 
with the requirements of the grant. It seems to me that cost shares and 
the leveraging of funds also should be readily available on the 
Internet so we have access to information about other sources of 
Federal, State or private funds that may be used to augment these grant 
awards. In brief, what does HUD believe should be the minimum 
requirements for transparency? What issues should not be subject to 
transparency? What steps is HUD currently taking to ensure that HUD 
grant decisionmaking is open and objective with benchmarks on the award 
of grants as well as a process to determine whether grants are meeting 
program goals and requirements? Is there a political review process at 
HUD which allows political decisionmaking once the underlying objective 
criteria process is complete?
    Answer. For our programs, both NOFAs clearly stated the process 
that would be used to evaluate and rate projects.
    HUD issued an Advance Notice of Funding Availability and the Office 
of Sustainable Housing and Communities organized a public listening 
tour with DOT and EPA in advance of the NOFA publication that directly 
influenced the structure of the funding notices. Each and every 
application for HUD programs is reviewed, evaluated and rated as stated 
in the Notice of Funds Availability (NOFA). There is no political 
process that is done once the objective process is complete.
    Additionally, both grant programs will involve a Logic Model that 
has specific performance indicators and there is also $8.5 million 
specifically for research and evaluation out of the fiscal year 2010 
funding. The $8.5 million is derived by an appropriation of $10 million 
less $1.5 million for the Transformation Initiative. The evaluation 
funds will be used to see how the grantees are performing. Specific 
information can be found on the Sustainable Housing Web site (HUD.gov/
sustainability). There is a list of applicants for both grants and a 
summary of those that were funded. The NOFAs contains what criteria 
were used and how the grantees applications were weighted.

 RELATIONSHIP BETWEEN HUD, EPA AND DOT IN THE SUSTAINABLE HOUSING AND 
                    COMMUNITIES INITIATIVES PROGRAM

    Question. HUD has established a new Office of Sustainable Housing 
and Communities with an appropriation of $150 million which will be 
available for regional planning efforts that integrate housing and 
transportation decisions as well as to increase State, regional and 
local capacity to incorporate livability, sustainability and social 
equity principles into land use and zoning. One hundred million dollars 
will be for regional integrated planning initiatives. HUD, EPA and DOT 
are directed to work together to bring coherence to the planning 
process. HUD is also asking for another $100 million for fiscal year 
2011.
    This program remains very ambiguous. A dialogue on livability and 
sustainability represents a good and healthy debate; however, we must 
be careful about not becoming too prescriptive or start to rely too 
much on Federal mandates to force certain conclusions. One size does 
not fit all--instead we must encourage flexibility and not try to 
purchase conclusions through grants. What is the current relationship 
between DOT, EPA and HUD as to sustainability/livability? How do the 
agencies work together and what are the problems?
    Answer. When we formed the Partnership for Sustainable Communities, 
the Department of Housing and Urban Development (HUD), the Department 
of Transportation (DOT), and the Environmental Protection Agency (EPA) 
agreed to collaborate to help communities become economically strong 
and environmentally sustainable. Through the Partnership and guided by 
six Livability Principles, the three agencies are coordinating 
investments and aligning policies to support communities that want to 
give Americans more housing choices, make transportation systems more 
efficient and reliable, reinforce existing investments, and support 
vibrant and healthy neighborhoods that attract businesses. Each agency 
is working to incorporate the principles into its funding programs, 
policies, and future legislative proposals. The Partnership breaks down 
the traditional silos of housing, transportation, and environmental 
policy to consider these issues as they exist in the real world--
inextricably connected. This results in better results for communities 
and uses taxpayer money more efficiently, because coordinating Federal 
investments in infrastructure, facilities, and services meets multiple 
economic, environmental, and community objectives with each dollar 
spent. As part of this effort, the three agencies have been working to 
identify barriers that exist.
    Additionally, in June 2010 HUD and DOT joined together to issue a 
joint Notice of Funding Availability to support integrated housing and 
transportation planning to eligible States, tribal governments, 
regions, and local units of government, making up to $75 million 
available for these activities.

  HUD, EPA AND DOT CONTRIBUTIONS TO SUSTAINABLE HOUSING AND COMMUNITY 
                           INITIATIVE PROGRAM

    Question. How much is each agency contributing to this initiative 
and what is the relationship of the different funding streams?
    Answer. HUD, DOT, and EPA have identified a set of priorities and 
roles that guide our individual and joint efforts. Within the 
Partnership for Sustainable Communities, each agency will incorporate 
the six Livability Principles into their policies and funding programs 
to the degree possible and adopt a common set of performance metrics 
for use by grantees that helps align and leverage Federal funds. As 
laid out in the agencies' joint fiscal year 2011 budget proposal, the 
agencies each propose to take the lead in different areas as further 
described below.
  --HUD will take the lead in funding, evaluating, and building the 
        capacity for integrated regional and local planning for 
        sustainable development, and will invest in sustainable housing 
        and community development efforts.
  --DOT will focus on building the capacity of transportation agencies 
        to integrate their planning and investments into broader plans 
        and actions that promote sustainable development, and investing 
        in transportation infrastructure that directly supports 
        sustainable development and livable communities.
  --EPA will provide technical assistance to communities and States to 
        help them implement sustainable community strategies, and 
        develop environmental sustainability metrics and practices.

                   REQUIREMENTS FOR RECEIVING A GRANT

    Question. What are the underlying requirements for receiving a 
grant under sustainability?
    Answer. We respectfully refer you to the Notices of Funding 
Availability that were issued on June 24, 2010 for the two Sustainable 
Communities grant programs, which describe the program requirements for 
each program.
    Sustainable Communities Regional Planning Grant Program.--http://
www.hud.gov/offices/adm/grants/nofa10/scrpgsec.pdf.
    Community Challenge Planning Grant Program.--http://www.hud.gov/
offices/adm/grants/nofa10/huddotnofa.pdf.

                     SUSTAINABILITY VS. LIVABILITY

    Question. Why does HUD call this initiative sustainability and DOT 
calls it livability?
    Answer. DOT uses the term ``livable,'' and by extension 
``livability,'' to describe a community where an individual or family 
does not need to get in a car in order to do such things as go out to 
dinner, go to a movie, or a park. DOT defines livability to mean 
building communities that help Americans live the lives they want to 
live--whether those communities are urban centers, small towns or rural 
areas. Whereas DOT's definition of livability reflects its 
transportation mission, HUD uses the terms ``sustainable communities'' 
and ``sustainability'' in its programs because of HUD's broader 
mission.
    Although HUD has not defined the term ``sustainability,'' it 
defines ``sustainable communities'' to mean ``urban, suburban, and 
rural places that successfully integrate housing, land use, economic 
and workforce development, transportation, and infrastructure 
investments in a manner that empowers jurisdictions to consider the 
interdependent challenges of: (1) economic competitiveness and 
revitalization; (2) social equity, inclusion, and access to 
opportunity; (3) energy use and climate change; and (4) public health 
and environmental impact.''
    Given its broader mission, which includes promoting such things as 
economic competitiveness, social equity, and public health, HUD has 
chosen to use what it considers to be a term that has a broader 
meaning. We do not see these terms as being in conflict, but rather 
represent a coordinated approach between our agencies.

                          PRIORITIZING FUNDING

    Question. Secretary Donovan, as you know, there are significant 
deficit issues facing the entire Federal Government. As I discussed, we 
are facing a $1.6 trillion deficit this year; a record $1.6 trillion 
deficit this year--10.6 of the Nation's GDP--the highest since World 
War II, and the future only looks worse, especially for future 
generations. The HUD budget is filled with new agenda items, such as 
Choice Neighborhood, Sustainable Communities, Transforming Rental 
Assistance with its future multi-billion out-year costs and Catalytic 
Investment Competition. How will these stack up with HUD's core 
programs like HOME, CDBG, public housing and section 8 with the two 
previous programs requiring increased additional costs for each fiscal 
year just to preserve the housing safety net for low-income families? 
There are many other housing and Transportation programs that will also 
need funding and are widely supported both in the Congress and 
throughout the Nation. How do you plan to prioritize funding?
    Answer. HUD's fiscal year 2011 budget request takes into 
consideration our core programs such as CDBG, public housing and 
section 8 rental assistance. In an effort to not only preserve the 
safety net that many of HUD's programs provide to low-income families 
and tenants, HUD sought to fundamentally change the way that our 
programs work to make them more efficient, serve more families and 
communities and preserve affordable rental housing options.
    HUD's request compliments our core programs with new initiatives 
like Choice Neighborhoods and Sustainable Communities. The Choice 
Neighborhoods Initiative modernizes the HOPE VI program so that 
neighborhoods and communities can access funding that will improve 
existing HUD-assisted housing as well as support other community 
development needs. The Sustainable Communities Initiative will help 
regions, communities and neighborhoods create comprehensive development 
plans that link housing, transportation and job opportunities together. 
These programs in addition to HUD's core programs will enable States, 
cities and regions to continue to serve low-income families, create 
more affordable housing options and spur economic development in a way 
that makes sense to that area.

                               LEVERAGING

    Question. Secretary Donovan, HUD is looking at requiring or perhaps 
providing points in the grant process for matching or leveraging of 
funds or ``in-kind'' matches. The in-kind matching sounds like little 
more that crediting an additional staff to a Sustainability program? 
How do you plan to measure or identify this match which seems hard to 
quantify?
    Answer. Matching funds are not required. However, applicants must 
provide 20 percent of the requested funding amount in leveraged 
resources in the form of cash and/or verified in-kind contributions or 
a combination of these sources. Successful applicants must have the 
required amount of leverages resources (20 percent) at the time of 
signing the cooperative agreement. In-kind contributions may be in the 
form of staff time, donated materials, or services. Please see section 
VIII.C. for a list of possible in-kind contributions. All assistance 
provided to meet this requirement must be identified by their dollar 
equivalent based upon accepted salary or regional dollar values. Cash 
contributions may come from any combination of local, State, and/or 
Federal funds, and/or private and philanthropic combinations dedicated 
to the express purposes of the proposal. Applicants will receive credit 
for leveraging resources greater than 20 percent of the requested 
amount, as described in section V., Rating Factor 4. If an applicant 
does not include the minimum 20 percent leveraged resources with its 
appropriate supporting documentation, that application will be 
considered ineligible. Please see section III.F., Threshold 
Requirements.
    We respectfully refer you to the Notices of Funding Availability 
that were issued on June 24, 2010 for the two Sustainable Communities 
grant programs, which describe how leveraging is defined and evaluated 
in each program.
    Sustainable Communities Regional Planning Grant Program.--http://
www.hud.gov/offices/adm/grants/nofa10/scrpgsec.pdf.
    Community Challenge Planning Grant Program.--http://www.hud.gov/
offices/adm/grants/nofa10/huddotnofa.pdf.

                                STAFFING

    Question. Secretary Donovan, how many staff do you have in the 
Office of Sustainable Communities and Housing? How many staff do you 
expect to hire and by when? Where will they be located and what will be 
there primary functions? How do you plan to perform grant review and 
selection? Will you or other political staff be part of the review and 
selection process? If yes, in what way?
    Answer. As of June 15, 2010, 14 of the allocated 19.5 full-time 
employees (FTEs) have joined the Sustainable Housing and Communities 
(OSHC). Another FTE will begin work on June 21. The remaining FTEs will 
join the Office over the next 2 months. They will be located in HUD 
Headquarters in Washington, DC. The primary functions of staff will be 
to establish the Office, administer and oversee the two grant programs, 
and coordinate with DOT, EPA and other Federal agencies involved in the 
Partnership for Sustainable Communities and related energy efficiency 
programs.
    We respectfully refer you to the Notices of Funding Availability 
that were issued on June 24, 2010 for the two Sustainable Communities 
grant programs, which describe the grant review process, selection 
criteria and rating factors for each program.
    Sustainable Communities Regional Planning Grant Program.--http://
www.hud.gov/offices/adm/grants/nofa10/scrpgsec.pdf.
    Community Challenge Planning Grant Program.--http://www.hud.gov/
offices/adm/grants/nofa10/huddotnofa.pdf.
    As noted in the NOFAs for both grant programs, a senior review team 
will be created for each grant program to review qualifying grant 
applications that receive qualifying scores from review teams comprised 
of career staff from HUD, DOT, EPA and other Federal agencies. For the 
Sustainable Communities Regional Planning grants, we also anticipate 
using representatives from philanthropy as review team members to 
supplement teams with outside expertise on sustainability and regional 
planning. The Senior Review teams will review qualifying applications 
using the same criteria and rating factors, but will not change project 
scores. The Director of the Office of Sustainable Housing and 
Communities will recommend selected projects to the Secretary for 
recommended funding based on the overall review process as described in 
the NOFAs for both grant programs.

                      SUSTAINABILITY VS LIVABILITY

    Question. What is HUD's relationship with DOT and these 
Sustainability and Livability programs? One of the primary goals is for 
DOT and HUD, and to some extent EPA, to work together on related issues 
under each department's jurisdiction to assist jurisdictions and joint 
jurisdictions to find common themes and activities that will facilitate 
the development of projects and help grow better communities through 
the interaction of these agencies.
    Neither HUD nor DOT appear to be making any real progress in 
growing their relationship and finding ways to join hands on grants and 
projects in order to improve the overall quality of life in that 
jurisdiction or jurisdictions.
    I am especially concerned that HUD calls its programs and 
activities ``sustainability'' and DOT calls its programs 
``Livability''. Why not a common name and definition? As you know, from 
a legal viewpoint, the use of different concepts infers that the 
concepts and activities are different. If the departments cannot come 
to a common concept for this program, how will you plan to reach a 
common working relationship?
    Answer. Given its broader mission, which includes promoting such 
things as economic competitiveness, social equity, and public health, 
HUD has chosen to use what it considers to be a term that has a broader 
meaning but is still consistent with the objectives incorporated within 
the term of Livability. We do not see these terms as being in conflict, 
but rather represent a coordinated approach between our agencies. 
Within the joint-NOFA issues by HUD and DOT for Community Challenge/
TIGER 2 Planning grants, both terms are used and described in terms of 
eligible activities and a focus on integrated housing and 
transportation planning.

                               OVERSIGHT

    Question. Secretary Donovan, it appears that Sustainability funding 
could go to a variety of different activities with the planning grants 
especially focused on staff and planning costs. These are often 
difficult funds to verify as to use. What are your plans to provide 
adequate oversight? This is a particularly sensitive issue now where 
jurisdictions are often surviving under very tight budgets--how will 
you ensure these funds are being used well for the intended purpose and 
not merely to maintain existing staffing?
    Answer. Grants made under both grant programs will be in the form 
of cooperative agreements, providing HUD greater opportunity to provide 
oversight in working with grantees. Grantees are required to develop 
detailed work plans within 60 days of grant execution and there are 
additional bi-monthly reporting requirements, all of which provide HUD 
the opportunity to verify use of funds and the on-going progress and 
eligibility of grantee activities. In addition, Congress included $10 
million in the fiscal year 2010 appropriation for a joint HUD-DOT 
research effort that includes a rigorous evaluation of the Sustainable 
Communities Regional Planning Grant and Community Challenge Planning 
Grant programs.

                             STAFF TURNOVER

    Question. Secretary Donovan, planning grants at the local level are 
intended to last 3 years and then hopefully we will reach a project 
decision in conjunction with a DOT project. How will jurisdictions 
demonstrate they will be able to transition the cost of staff from 
Sustainability to other resources?
    Answer. You are correct that these are 3-year planning funds. The 
work plans and budgets developed by grantees cover work to be performed 
only during that timeframe. Applicants will be rated on their capacity 
to see these plans through to implementation, which includes plans to 
address turnover and a limited time horizon for funding toward staff 
costs.

                             PROJECT COSTS

    Question. After the planning stage, how much does HUD estimate the 
project stage will cost annually? Rough estimate--how can we be 
expected to even fund planning if we have no hard cost estimates for 
project costs especially with expected very tight budgets?
    Answer. Given the significant variation that we anticipate to see 
from each region as it develops its own regional and community plans, 
HUD is not able to forecast or estimate a number to answer this 
question. We do not advocate a one-size fits all, cookie cutter 
approach and these are decisions that will be made at the regional and 
local level, not by the Federal Government. Furthermore, the plans that 
will be developed will include consideration of Federal, State, local 
and private sector finance. As noted in the Livability Principles 
included as factors within the grant programs, however, the Partnership 
for Sustainable Communities places a strong focus on leveraging 
investments and coordinating policies and plans to achieve economic 
efficiency. We have seen in some regions such as Salt Lake City, UT 
substantial cost savings from avoided infrastructure costs as a result 
of integrated regional planning.

                          CHOICE NEIGHBORHOODS

    Question. Secretary Donovan, HUD is proposing to fund Choice 
Neighborhoods at $250 million in fiscal year 2011 and Sustainability at 
another $150 million in fiscal year 2011. Both programs require the 
consultation and integration of program requirements under other 
agencies, including primarily DOT and HUD. What is the difference 
between these programs and why fund both when the goals are nearly the 
same. At a time of tight projects, shouldn't we fund one or the other, 
not both?
    Answer. HUD's Choice Neighborhoods Initiative focuses on the 
redevelopment, replacement and community integration of distressed 
public and HUD-assisted housing that cannot be funded through current 
annual funding formulas. The goal of the Choice Neighborhoods 
initiative is to provide investment targeted to distressed, high-
poverty neighborhoods, to create opportunity in those neighborhoods and 
improve quality of life for residents. Choice Neighborhoods builds off 
of the HOPE VI program, which focuses on the rehabilitation and 
replacement of severely distressed public housing units, but takes it 
one step further to include HUD-assisted housing and encourage other 
types of community development. Where possible, HUD will coordinate 
with the Department of Education's Promise Neighborhoods program, which 
aims to improve schools and education-related activities in high 
poverty areas, the Department of Justice's Byrne Innovation program, 
which has been proposed to replace Weed and Seed, and other Federal 
programs to help grantees maximize the impact of Federal investments. 
Improvements in housing, access to educational opportunities and other 
community amenities will promote economic growth in low-income 
neighborhoods and resident self-sufficiency.
    The Sustainable Communities Initiative focuses more on holistic 
community planning at the metropolitan, regional, or county level, so 
that areas can then implement their own community development plans 
that take into account access to public transportation, community 
amenities and affordable housing. The Sustainable Communities 
Initiative is a collaboration with the Department of Transportation and 
the Environmental Protection Agency to address land-use, housing and 
transportation planning in order to promote more accessible and livable 
communities. These integrated plans may serve as a road map for 
transportation, infrastructure and housing investments in the future.
    Each of these initiatives does focus on better community and 
neighborhood planning and development, however, they have two different 
goals. The Sustainable Communities Initiative works at a larger 
geographic scale to assist local governments in coordinating housing, 
transportation and other amenities to reduce transportation costs and 
developed mixed-income and mixed-use housing in order to create a more 
viable community. The Choice Neighborhoods Initiative focuses more 
specifically, in distressed neighborhoods, on redeveloping and 
rehabilitating distressed public and/or HUD-assisted housing and 
improving economic and other opportunities in those neighborhoods.

    Senator Murray. I want to thank both of you for your work 
on this issue and for being here today and look forward to 
working with you in the coming months and years.
    Thank you very much.

                          SUBCOMMITTEE RECESS

    With that, this hearing is recessed. We will reconvene on 
May 13 at 9:30 a.m. with testimony from Commissioner Stevens on 
fiscal year 2011 budget request for FHA.
    [Whereupon, at 10:57 a.m., Thursday, May 6, the 
subcommittee was recessed, to reconvene at 9:30 a.m. Thursday, 
May 13.]
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