[Senate Hearing 112-515]
[From the U.S. Government Publishing Office]
S. Hrg. 112-515
THE CHOICE NEIGHBORHOODS INITIATIVE: A NEW COMMUNITY DEVELOPMENT MODEL
=======================================================================
HEARING
before the
SUBCOMMITTEE ON
HOUSING, TRANSPORTATION, AND COMMUNITY DEVELOPMENT
of the
COMMITTEE ON
BANKING,HOUSING,AND URBAN AFFAIRS
UNITED STATES SENATE
ONE HUNDRED TWELFTH CONGRESS
SECOND SESSION
ON
EXAMINING THE CHOICE NEIGHBORHOODS INITIATIVE AND HOW IT COULD BE
IMPROVED, AND HOW COST-EFFECTIVE CHOICE NEIGHBORHOODS AND ITS
PREDECESSOR, HOPE VI, ARE IN TERMS OF OUTCOMES FOR FAMILIES AND
NEIGHBORHOODS AND GRANTEES IMPLEMENTING ACTIVITIES IN OUR COMMUNITIES
__________
MARCH 27, 2012
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COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS
TIM JOHNSON, South Dakota, Chairman
JACK REED, Rhode Island RICHARD C. SHELBY, Alabama
CHARLES E. SCHUMER, New York MIKE CRAPO, Idaho
ROBERT MENENDEZ, New Jersey BOB CORKER, Tennessee
DANIEL K. AKAKA, Hawaii JIM DeMINT, South Carolina
SHERROD BROWN, Ohio DAVID VITTER, Louisiana
JON TESTER, Montana MIKE JOHANNS, Nebraska
HERB KOHL, Wisconsin PATRICK J. TOOMEY, Pennsylvania
MARK R. WARNER, Virginia MARK KIRK, Illinois
JEFF MERKLEY, Oregon JERRY MORAN, Kansas
MICHAEL F. BENNET, Colorado ROGER F. WICKER, Mississippi
KAY HAGAN, North Carolina
Dwight Fettig, Staff Director
William D. Duhnke, Republican Staff Director
Beth Cooper, Professional Staff Member
Dawn Ratliff, Chief Clerk
Riker Vermilye, Hearing Clerk
Shelvin Simmons, IT Director
Jim Crowell, Editor
Subcommittee on Housing, Transportation, and Community Development
ROBERT MENENDEZ, New Jersey, Chairman
JIM DeMINT, South Carolina, Ranking Republican Member
JACK REED, Rhode Island MIKE CRAPO, Idaho
CHARLES E. SCHUMER, New York BOB CORKER, Tennessee
DANIEL K. AKAKA, Hawaii PATRICK J. TOOMEY, Pennsylvania
SHERROD BROWN, Ohio MARK KIRK, Illinois
JON TESTER, Montana JERRY MORAN, Kansas
HERB KOHL, Wisconsin ROGER F. WICKER, Mississippi
JEFF MERKLEY, Oregon
MICHAEL F. BENNET, Colorado
Michael Passante, Subcommittee Staff Director
Jeff Murray, Republican Subcommittee Staff Director
(ii)
C O N T E N T S
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TUESDAY, MARCH 27, 2012
Page
Opening statement of Chairman Menendez........................... 1
WITNESSES
Sandra Henriquez, Assistant Secretary for Public and Indian
Housing, Department of Housing and Urban Development........... 2
Prepared statement........................................... 22
Maria Maio, Executive Director, Jersey City Housing Authority.... 7
Prepared statement........................................... 28
Susan J. Popkin, Ph.D., Director, Program on Neighborhoods and
Youth Development, Urban Institute............................. 9
Prepared statement........................................... 30
Anthony B. Sanders, Ph.D., Distinguished Professor of Finance,
George Mason University School of Management................... 11
Prepared statement........................................... 36
Paul N. Weech, Executive Vice President, Policy and Member
Engagement, Housing Partnership Network........................ 12
Prepared statement........................................... 38
Egbert L.J. Perry, Chairman and Chief Executive Officer, The
Integral Group LLC............................................. 14
Prepared statement........................................... 48
Additional Material Supplied for the Record
Prepared statement submitted by Mitchell J. Landrieu, Mayor, City
of New Orleans, Louisiana...................................... 52
Letter submitted by Stewards of Affordable Housing for the Future 54
Letter submitted by Michael Rubinger on behalf of the Local
Initiatives Support Corporation................................ 56
(iii)
THE CHOICE NEIGHBORHOODS INITIATIVE: A NEW COMMUNITY DEVELOPMENT MODEL
----------
TUESDAY, MARCH 27, 2012
U.S. Senate,
Subcommittee on Housing, Transportation, and
Community Development,
Committee on Banking, Housing, and Urban Affairs,
Washington, DC.
The Subcommittee met at 10:40 a.m. in room SD-538, Dirksen
Senate Office Building, Hon. Robert Menendez, Chairman of the
Subcommittee, presiding.
OPENING STATEMENT OF SENATOR ROBERT MENENDEZ
Senator Menendez. Good morning, and let me say we are sorry
we are starting a few minutes late. We had a conference call
with several parties, and it lasted a little longer than I had
expected.
The hearing of the Senate Banking Committee's Subcommittee
on Housing, Transportation, and Community Development will
examine the Choice Neighborhoods Initiative, both as it has
been enacted through appropriations thus far and as it is
proposed in my bill, the Choice Neighborhoods Initiative Act of
2011, S. 624.
Among the issues considered will be how the program differs
from its predecessor, the HOPE VI program; how it could be
improved; how cost-effective Choice Neighborhoods and HOPE VI
are in terms of outcomes for families and neighborhoods and
grantees' planning and implementation activities on the ground
in our local communities.
Choice Neighborhoods aims to revitalize severely distressed
communities of concentrated poverty which are often marked by
high crime and unemployment rates, health disparities,
struggling schools, and faltering civic institutions. Built on
a foundation of over 15 successful years of bipartisan HOPE VI,
Choice Neighborhoods embodies the best of HOPE VI, but builds
on it by asking grantees to develop plans for integrated
supports for residents, ensuring high-quality educational
opportunities for children, access to transportation and jobs,
and providing health options and job readiness skills for
families. Moreover, Choice Neighborhoods expands HOPE VI
redevelopment techniques to aid in providing redevelopment of
private federally assisted properties alongside public housing,
and there is huge demand for the program with local
applications far outstripping the funds available for it.
All Americans should enjoy equal opportunity and access to
affordable housing in safe neighborhoods. It is imperative that
we continue to support Choice Neighborhoods as it provides
long-term viability for families and communities nationwide. I
look forward to hearing from the witnesses as they discuss
their experiences with HOPE VI and Choice Neighborhoods and the
potential of Choice Neighborhoods as a practical, cost-saving
solution to redevelopment of distressed housing and
neighborhoods that leverage private, nonprofit, and local
resources to a much greater degree.
We are thrilled to have a host of witnesses. We are going
to start off with the Honorable Sandra Henriquez, who is the
Assistant Secretary for Public and Indian Housing at the U.S.
Department of Housing and Urban Development. As part of the
senior leadership team at HUD, Ms. Henriquez oversees the
Nation's public housing, rental assistance programs, and Native
American and Native Hawaiian programs. She is the past
administrator and chief executive officer of the Boston Housing
Authority and the past president and director of the Council of
Large Housing Authorities.
With that, Madam Secretary, we appreciate your appearance.
We would ask you to synthesize your statement for about 5
minutes. Your full statement will be entered into the record,
and please proceed.
STATEMENT OF SANDRA HENRIQUEZ, ASSISTANT SECRETARY FOR PUBLIC
AND INDIAN HOUSING, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Ms. Henriquez. Thank you very much, Mr. Chairman. It is
good to be here, and thank you for this opportunity to discuss
how the Choice Neighborhoods program uses proven tools to
transform neighborhoods by revitalizing not just public housing
but all kinds of federally supported housing in poor
neighborhoods.
Today I want to describe the need for authorizing Choice
Neighborhoods, how it builds on the progress of the HOPE VI
program, and how at a time when our national economy is growing
it helps local leaders turn around distressed neighborhoods
that are critical to helping regional economies rebound.
In less than 2 years, this program has already had great
success helping communities tackle housing distress and
leveraging private dollars. I am particularly grateful for the
leadership that you have shown, Mr. Chairman, in sponsoring
legislation that would authorize Choice Neighborhoods formally.
As local leaders continue to dig their communities out of
the worst recession since the Great Depression, we recognize
that the cost of poverty, particularly concentrated poverty, to
our society and to our economic future is high. Today more than
10 million people live in neighborhoods of concentrated
poverty--surrounded by disinvestment, failing schools, troubled
housing, and, worst of all, virtually no path to opportunity
for themselves or for their children. And that is why this
Administration has pursued Choice Neighborhoods, which builds
on the HOPE VI public housing revitalization program pioneered
by HUD Secretaries Jack Kemp and Henry Cisneros.
With strong bipartisan support, HOPE VI has created more
than 90,000 housing units in healthy, mixed-income communities
that were once troubled by distressed public housing,
leveraging twice the Federal investment with additional private
capital and raising the average income of residents by 75
percent or more.
Chairman Menendez, HOPE VI changed the face of public
housing in America, but in many neighborhoods that is simply
not enough. In Little Rock, Arkansas, a struggling neighborhood
just southeast of the downtown area is being challenged by both
a severely distressed public housing development, Sunset
Terrace, as well as a severely distressed 50-unit HUD-assisted,
project-based Section 8 development, Elm Street. Both
properties have deteriorating foundations and structures,
electrical and plumbing problems, and the surrounding
neighborhood is affected by high crime, poor schools, and
widespread vacancy.
In the past, this neighborhood would have presented a
worst-case situation for HUD because two separate and distinct
HUD program areas were contributing to its deterioration. With
HOPE VI, the community could have redeveloped the public
housing property, but the Elm Street housing development in
Little Rock would have been out of reach simply because it was
subsidized by a different program at HUD.
Now, we all know that residents do not make the distinction
between public housing and project-based Section 8. Communities
do not make that distinction, and those who engage in criminal
activity certainly do not make that distinction. And 3 years
ago, the only one making that distinction was HUD, but with
Choice Neighborhoods, we are not anymore.
Indeed, having secured a Choice Neighborhoods Planning
Grant, the Little Rock Housing Authority is partnering with the
owner of the HUD-assisted development to engage city and civic
leaders in turning around the neighborhood. Choice builds on
HOPE VI by recognizing that the problem of high concentrations
of distressed housing in a single neighborhood of concentrated
property is not limited solely to public housing. Indeed, we
are not only hearing this from private owners, but we hear it
from public housing authority executive directors, from mayors,
residents, and other leaders across the country. They are
telling us that Choice Neighborhoods is exactly the kind of
catalytic tool they need to revitalize distressed neighborhoods
with the flexibility local leaders want and need to address
their specific challenges, from improving neighborhood
infrastructure to ensuring high-quality, early learning
opportunities for children. They know that Choice Neighborhoods
funds leverage significant dollars from the private and public
sector. Already the $122 million in implementation grants that
we have made thus far has leveraged a combined $1.6 billion,
over 13 times their total grant award, with more to come as the
redevelopment work accelerates.
Mr. Chairman, that is real and serious return on the
Federal investment, but that is not all that Choice
Neighborhoods leverages. Indeed, at a time when Federal dollars
are precious, Choice Neighborhoods has been critical to
strengthening taxpayer dollars further. In Seattle, a $10
million grant is leveraging $32 million from the Seattle
Department of Transportation to ensure families can get to and
from work, while Boston is leveraging $350,000 in workforce
investment funds to ensure residents can get the job training
they need to be part of the 21st century economy.
New Orleans' grant is leveraged nearly $1 million from Head
Start and another half million from a federally qualified
health center so children can get the quality education and
care they need to grow up healthy.
In San Antonio's Eastside neighborhood, where almost half
of the area's residents live in poverty and drop out of school,
Choice is working in concert with the Department of Education's
Promise Neighborhoods program. As the city's Choice
Neighborhoods planning grant helps the city plan to revitalize
Wheatley Courts public housing, its Promise Neighborhoods grant
will help improve schools. It is the same consortium of local
and partner institutions at the table that are building a
vision, a shared vision for this work, and this funding ensures
public, private, and nonprofit partners are all working
together to provide good schools and quality learning
opportunities in the center of these neighborhoods.
It is about attacking interconnected challenges with
comprehensive proven tools. It is about understanding that
local problems require locally driven solutions. It is about
understanding that the Federal Government can serve as an
effective supporting partner. It is about making taxpayer
dollars go as far as they can. But, fundamentally, it is about
making sure every American gets a fair shot, whoever they are,
wherever they live. That is what Choice Neighborhoods is all
about. That is why we ask Congress to authorize this program,
and that is why I am so appreciative of this opportunity to
appear before you today.
Thank you and I look forward to your questions.
Senator Menendez. Well, thank you very much for that
overview.
Let me just take advantage that you are here and we are
developing a record to ask you some questions, and I think you
in some respects touched upon this, but I want to hone in for
our colleagues who will be reading the transcript. How does
Choice Neighborhoods represent a new model of community
development compared to HOPE VI?
Ms. Henriquez. Thank you for the question. As you know,
HOPE VI really was limited only for housing authorities to
apply and really looked at revitalizing the footprint of the
existing public housing developments. And the revitalization
efforts beyond that footprint might have been able to be
accomplished, but not necessarily with the same strength and
vitality we see coming out of the Choice Neighborhoods program.
Choice differs in that it takes the lessons we have learned
from housing authorities in their creativity in their local
levels, but takes it a step further so that there are more
partners at the table. Not only housing authorities can apply,
but project-based Section 8 multi-family owners can apply, city
governments can apply, and it really builds a comprehensive
shared vision for community reinvestment and revitalization,
looking beyond the public housing or the single housing site
footprint.
It makes sure that the commitment is shared, the resources
are shared, and, therefore, those resources will go further and
have a greater impact in revitalizing well into the community
neighborhood in which those properties are located.
Senator Menendez. Now, in your testimony you referred to
leveraging, which I appreciate. In that context, can you
explain the importance of partnerships to the success of Choice
Neighborhoods.
Ms. Henriquez. Partnerships are vitally critical, and
through this process we have learned at HUD to be a better
partner, to support visions of local government and
communities. But, indeed, if you start really talking about
what Choice brings to the table, it is to have people talking
at the local level who maybe did not do that before to get
investment, to figure out where people's individual resources
are in a community, and bring them together in a conversation
so that everybody then understands we are serving a similar
constituency, but we want to make sure that our dollars are
going further and we understand better as a community at the
local level what a community needs to be healthy, all the
things that we all take for granted, or many of us take for
granted: good education, good public transportation, safety on
our streets. All of what we would call the infrastructure, the
backbone, and the amenities that one would find in any well-
developed community, that is what we are trying to return to
distressed communities through the Choice Neighborhoods
program.
Senator Menendez. And in your examples of successful
leveraging or investments under the Choice Neighborhoods
program created a ripple effect, would those have taken place
but for Choice Neighborhoods, the likelihood of that?
Ms. Henriquez. The likelihood is that they would not have.
We have seen some leveraging in the HOPE VI program. We see
probably it is 2:1 or 3:1 in terms of the Federal investment.
On the Choice side, we are already seeing 13 times.
I work to stress, though, that some of the leveraging and
the benefits we will not see. They will continue to build. You
will see better health outcomes, better education outcomes,
more economic independence for residents in those communities.
And so the ripple effect will be larger, longer, and stronger.
Senator Menendez. That precipitates what was my next
question. Can you give us examples of how this can improve
cost-effectiveness? I would assume those are elements of it,
the ones you just described.
Ms. Henriquez. They are. We believe that with these kinds
of improvements and investments, you will do a number of
things. You will revitalize not just the neighborhood where
that Choice Neighborhoods grant is being implemented. You will
continue a conversation on the ground. You will see
reinvestment from the private sector coming back into other
parts of that community. You will see, we believe, economic
vitality, businesses reinvesting in those neighborhoods. We are
just not sure of all of what you will see. We think that it
will be to the level of something we will be measuring 10, 15,
20 years from now and beyond.
Senator Menendez. Which then brings me to my final set of
questions. In HUD's experience, what has been the local demand
for programs like Choice Neighborhoods? And how many applicants
are there, and how much is HUD able to fund?
Ms. Henriquez. We funded five implementation grants this
past--a year ago. I think we had over 100 applications for
that. We, therefore, right now have funded a total in 2 years
of 30 planning grants so that local neighborhoods can start the
conversation to get themselves ready to apply for an
implementation grant. We have given 30 of those out, and we
have had hundreds of inquiries and applications for those
limited numbers of planning grants as well. And the demand
keeps building.
Senator Menendez. One of our panelists on this next panel
will say that this is actually a fairly small program and
question whether or not that is of value considering that,
among other issues. Are there benefits that accrue to
applicants who apply for Choice Neighborhoods grants but do not
get one?
Ms. Henriquez. I would say undeniably yes. While it is a
relatively small program, the leveraging and the amount of
other private and public sector dollars that come into the
arena for revitalization keeps multiplying and multiplying and
multiplying. The benefit of having planning grants even if
those communities are not successful in getting an
implementation grant is that the conversation and the shared
vision and the shared planning moving forward really helps
those communities begin to identify and leverage other kinds of
programs and other kinds of dollars that they might not have
thought about before, and they can do lots of that work with
very little funding and at least identify the direction in
which as a community they want to move. And as resources become
identified, they can put those resources toward that shared
vision. And I think that that is a huge benefit to begin the
conversation and to get everybody at the table thinking about
how they want all of their citizens to live.
Senator Menendez. Well, I appreciate your testimony. In
your testimony you say we can predict outcomes in health,
education, and economic outcomes of children based on zip code.
Ms. Henriquez. That is correct.
Senator Menendez. And it seems to me that that is a pretty
sad reality. We should live in a Nation in which the
happenstance of what zip code you live in is not the
determinant of where you will end up in life.
Ms. Henriquez. We wholeheartedly agree.
Senator Menendez. And so I look forward to working with you
in this one area. This is only one of many, but one area that I
think we can, for a relatively small amount of money, make a
big difference.
Thank you very much for your testimony and for your
leadership.
Ms. Henriquez. Thank you very much.
Senator Menendez. With that, let me introduce our next
panel, and I will ask them to come up as the Secretary leaves
with the thanks of the Committee.
Ms. Maria Maio is the Executive Director of the Jersey City
Housing Authority, which has more than 2,500 public housing
units, more than 3,900 rental vouchers, and three HOPE VI
demolition and revitalization programs. Ms. Maio has over 40
years of professional experience--because she was taken from
the crib to start in this field--in planning, developing,
financing, administering, and managing assisted housing in
Jersey City. I have known her for a very long time, and I
appreciate her coming from New Jersey to give us an on-the-
ground perspective how Choice Neighborhoods is working in
Jersey City. I appreciate your leadership. It has just been
extraordinary.
Dr. Susan Popkin is the Director of the Urban Institute's
Program on Neighborhoods and Youth Development. Dr. Popkin's
research has focused on the impact of the changes in housing
policy over the past decade on the lives of the most vulnerable
public and assisted housing families, including the HOPE VI
panel study, the first large-scale systematic look at outcomes
for families relocated from public housing. We welcome you to
the Committee.
Dr. Anthony Sanders is a Distinguished Professor of Finance
in the School of Management at George Mason University, a
Senior Scholar at the Mercatus Center, and he has been before
the Committee many times, and we appreciate him coming back
with us again.
Mr. Paul Weech is the Executive Vice President for Policy
and Member Engagement at the Housing Partnership Network. He
has served as Vice President for mission strategy execution at
Fannie Mae, Chief of Staff at the United States Small Business
Administration, Staff Director for the Subcommittee on Housing
and Community Development for this Committee--which is the most
significant of all the Subcommittees--and Senior Analyst for
housing and credit for the U.S. Senate Committee on Budget. We
welcome you back to the Senate as well.
Mr. Egbert Perry is the Chairman and Chief Executive
Officer of the Integral Group, a full-service development and
real estate advisory and investment management firm. Mr. Perry
has provided the entrepreneurial leadership and vision to grow
the firm into a leading innovator in the field of mixed-use and
mixed-income developments as well as a driving factor in
creating private-public partnerships that create opportunity
for development and redevelopment in underserved communities.
Let me welcome you all to the Committee. In the order in
which I introduced you, starting with Ms. Maio, I will ask you
to summarize your statement in about 5 minutes. All of your
full statements will be included in the record, and with that,
we welcome you.
STATEMENT OF MARIA MAIO, EXECUTIVE DIRECTOR, JERSEY CITY
HOUSING AUTHORITY
Ms. Maio. Thank you, Chairman Menendez. I greatly
appreciate your invitation and am honored to be here today to
testify before the Subcommittee.
As you are aware, the Jersey City Housing Authority
received one of the first 2010 Choice Neighborhoods planning
grants and now is in the midst of preparing an application for
a Choice Neighborhoods Implement Grant.
As has been mentioned, Choice Neighborhoods builds upon the
model and achievements of the HOPE VI program. HOPE VI has
transformed communities by turning severely distressed public
housing into mixed-income, mixed-use, and revitalized
communities that serve as long-term assets in their
neighborhoods. HOPE VI has led the way in establishing new
partnerships and leveraging additional resources. HOPE VI has
also been a pioneer and laboratory for neighborhood place-based
redevelopment. This has been true for us.
The Jersey City Housing Authority has been awarded three
HOPE VI Revitalization Program grants, which have resulted in
730 constructed units and 275 planned units in mixed-income
communities including public housing, affordable, and market-
rate units. Our HOPE VI communities have served as a model for
developing quality sustainable affordable housing, which has
been applauded by City, State, and Federal officials and
residents of public housing and the broader community and
imitated by private and not-for-profit developers.
Our HOPE VI programs met the goals of rebuilding severely
distressed public housing, deconcentrating poverty, leveraging
non-Federal funds--for us $3 for every dollar of HOPE VI--and
providing higher-quality, efficient affordable housing with
reduced operating costs through the physical transformation to
mixed-income developments and a Community and Supportive
Services Program that focused on self-sufficiency initiatives,
with a major goal of reducing unemployment.
The HOPE VI program also began the organizational
transformation of the Jersey City Housing Authority from
property manager to developer. Today the housing authority is
regarded as the major affordable housing developer in the city.
Severely distressed public housing has been replaced with
lower-density housing that complements the existing
neighborhood, new developments that are community assets, and
attracting a diverse economic resident population in well-
maintained housing. Critics of the stereotyped public housing
have become the strongest supporters of our HOPE VI
developments.
Much of the success of our HOPE VI program is the result of
our strong commitment to Section 3 local hiring initiatives. To
date, 500 public housing/local residents have been hired and
$22 million has been targeted to Minority Business Enterprises.
To date, 66 percent of the public housing units in HOPE VI
developments have been leased to former relocatees. But perhaps
the best indication of success comes from a public housing
resident who returned to a HOPE VI development and expressed
how her child can ``sleep in peace, I don't hear gun shots in
the middle of the night.''
Whereas the major HOPE VI focus was on addressing severely
distressed public housing, Choice capitalizes on the strengths
of institutions and assets of the neighborhood, convenes all
neighborhood stakeholders and encourages their input, and pulls
together disparate developments in various stages to plan and
implement a singular comprehensive neighborhood transformation
plan through tried-and-true successful public-private
partnerships.
The Choice Neighborhood Initiative will allow us to expand
on our successful public-private partnerships to develop a
comprehensive plan for a neighborhood that includes the
transformation of Montgomery Gardens, our remaining high-rise
family development within the broader McGinley Square-
Montgomery Corridor Neighborhood. Montgomery Gardens is
currently perceived as a liability to further renewed
investment in the neighborhood.
Perhaps most importantly, the transformation of Montgomery
Gardens to a new Choice community that guarantees one-for-one
replacement housing, ensures that the inevitable gentrification
that will accompany market rate development will be addressed
by the inclusion of affordable housing resulting in a quality
mixed-income community.
In closing, I thank you for the opportunity to testify
today and am available for any questions. Thank you.
Senator Menendez. Wow, you set a precedent. You still had a
minute.
Ms. Maio. I know.
[Laughter.]
Ms. Maio. I am from Jersey.
[Laughter.]
Senator Menendez. Only the strong survive. All right.
Dr. Popkin? No pressure for the rest of the panel.
Ms. Popkin. I do not know if I can match that.
STATEMENT OF SUSAN J. POPKIN, Ph.D., DIRECTOR, PROGRAM ON
NEIGHBORHOODS AND YOUTH DEVELOPMENT, URBAN INSTITUTE
Ms. Popkin. Senator Menendez, thank you for inviting me to
appear here today. For the past 14 years, I have been studying
the impact of the HOPE VI program on the original residents of
public housing projects that are demolished and replaced. While
most of my research has focused on Chicago, I have conducted
research in 13 HOPE VI sites around the country. The testimony
I present here today draws from four major studies: the HOPE VI
Panel Study, which tracked residents from five sites across the
country; the Chicago Panel Study; the Chicago Family Case
Management Demonstration; and the new HOST Demonstration.
The three main takeaways from this research are:
Because of HOPE VI redevelopment, most former residents now
live in better housing and neighborhoods that are considerably
less poor and dramatically safer than their original distressed
public housing communities.
HOPE VI was less successful in helping families improve
their economic circumstances and was not a solution for the
most vulnerable households.
Our subsequent research makes clear that many families
require more intensive, better coordinated services and that
comprehensive community redevelopment efforts seeking to
improve the well-being of all residents in distressed
neighborhoods will need to provide intensive services that
intentionally target both vulnerable children and adults.
HOPE VI was at its core a housing intervention, and there
is no question that the program changed the face of public
housing and succeeded in its goal of improving residents' life
circumstances. Our studies find that the majority of families
have experienced meaningful improvement in their housing and
overall quality of life as a result of HOPE VI redevelopment,
even though most residents have not moved back to the new,
mixed-income communities. Most residents are living in
communities that are less poor and dramatically safer. For
example, after relocation, the proportion of respondents in our
study who rated violence--shootings, attacks, and sexual
assault--as big problems in their communities declined by more
than 50 percent. The benefits of these improvements in safety
are profound, with residents reporting significantly lower
levels of anxiety and fear and describing being able to sleep
better and feeling comfortable letting their children play
outside.
But this research also highlights the significant
challenges that remain, particularly residents' shockingly poor
health and persistently low levels of employment, problems that
will require more intensive, focused interventions. At every
age level, HOPE VI Panel Study respondents are more likely to
describe their health as fair or poor than other adults and to
report suffering from a range of chronic, debilitating
conditions, including arthritis, asthma, obesity, depression,
diabetes, hypertension, and stroke. The mortality rate for
these residents was stunningly high--more than twice that of
the general population.
In addition to providing an improved living environment,
HOPE VI sought to help residents attain self-sufficiency.
However, our research shows that employment rates have remained
persistently low, averaging just under 50 percent. Physical and
mental health problems, particularly mobility limitations, are
by far the biggest barrier to employment.
Many residents who leave public housing struggle to make
ends meet. Our studies show that many are forced to make
tradeoffs between paying their rent and keeping up with utility
payments and even affording food for their families.
The HOPE VI program was not a solution for the most
vulnerable former residents, the subset of hard-to-house
families who make up a large share of the population in
distressed public housing and struggle with multiple complex
problems like physical and mental health problems, low levels
of educational attainment, weak labor force attachment,
substance abuse, and domestic violence.
For the past 5 years, the Urban Institute has been working
with housing authorities to test more intensive service models
to address these deeper challenges. Our first demonstration ran
from 2007 to 2010, providing participants with intensive case
management, transitional jobs, financial literacy training, and
mobility counseling to support participants in moving to
communities that offered better opportunities.
The demonstration was remarkably successful, engagement was
high, and participants reported gains in employment, physical
and mental health, and housing and neighborhood conditions, but
the benefits of intensive services and case management for
adults did not trickle down to their children.
Developing effective place-based models that do reach youth
is critical not only for improving the lives of individual
children but also for ensuring the health and viability of
public and mixed-income communities. If successful, these
strategies can reduce problems that drive residents away from
neighborhoods: vandalism, drug trafficking, fighting, and gang
activity.
The Urban Institute's new, multisite HOST Demonstration is
testing these kinds of dual-generation service models aimed at
improving the life chances of vulnerable low-income families
living in both public and mixed-income communities.
Incorporating intensive case management and permanent
supportive housing for the most vulnerable residents into
Choice Neighborhoods and any other comprehensive redevelopment
efforts is one way to ensure that these initiatives truly meet
the needs of all public housing families. The Choice
Neighborhoods Initiative builds on the successes of HOPE VI and
broadens the scope of revitalization efforts beyond public
housing to the surrounding community, including schools and
other types of housing. However, if this new effort is to be
more successful than its predecessor in improving the lives--
and long-term life chances--of the families who suffered the
worst consequences of living in distressed public housing, it
must incorporate strategies that effectively address their
needs. None of these solutions are simple, and all will require
a long-term commitment to improving the quality of life for
these families and ensuring better futures for their children.
Thank you.
Senator Menendez. Thank you.
Dr. Sander.
STATEMENT OF ANTHONY B. SANDERS, Ph.D., DISTINGUISHED PROFESSOR
OF FINANCE, GEORGE MASON UNIVERSITY SCHOOL OF MANAGEMENT
Mr. Sanders. Senator Menendez and distinguished Members of
the Committee, my name is Dr. Anthony B. Sanders, and I am the
Distinguished Professor of Finance at George Mason University
and a senior scholar at the Mercatus Center. It is an honor to
testify before this Committee today.
I am here to discuss a proposed Senate bill, S. 624, the
Choice Neighborhoods bill. This bill calls for $350 million in
2012 for competitive grants to revitalize distressed
neighborhoods.
As someone who has lived on the South Side of Chicago and
outside of Elizabeth in Jersey City, New Jersey, I clearly
understand the spirit of what this legislation is attempting to
do.
But $350 million spread over the United States for
distressed neighborhoods is a drop in the bucket. Bear in mind
that Stanford University recently built a business school
campus--two buildings--for $345 million. And yet Detroit,
Cleveland, and many other inner cities continue to suffer.
Now, I have a question and a suggestion. The Department of
Housing and Urban Development Secretary Shaun Donovan is an
advocate of improving the quality of housing projects in the
United States. Why didn't HUD find this money in their $47.2
billion budget through effective budget management or
additional requests? I do not know the answer to that, but that
would have seemed to have been a more likely way to do this.
But another way to help solve the problem is to unleash the
free market on housing. Taking a page from President Reagan and
the Democratic majority playbook, we could use fiscal policy to
increase the supply of clean, affordable housing by offering
accelerated depreciation deductions on multifamily housing.
This will increase the supply of housing without having to go
through the housing authorities per se and not-for-profits, and
it would actually increase the supply again of livable housing,
which some cities are woefully short on.
The Reagan/Democratic congressional approach--known as the
Kemp-Roth Economic Recovery Tax Act of 1981--was put in to
increase depreciation deductions on multifamily housing using
the Accelerated Cost Recovery System. Under this legislation,
all property was depreciable for tax purposes over 15 years,
and for low-income housing, 200 percent declining balance
depreciation was available. Furthermore, rehabilitation
expenditures for low-income housing could be amortized over 5
years. The act worked so well that it was amended in 1986 with
the follow-up act.
We could once again use fiscal policy to help solve the
public housing problem. I would prefer this approach to smaller
allocations of capital in trying to get to this.
To be sure, such legislation would create additional
deficits, but the stimulative effects to the economy and the
distressed neighborhoods could be greater than the lost tax
income received by the Federal Government.
Now, recently, Bank of America announced a ``Mortgage to
Lease'' trial program to avoid foreclosure and yet another
property going into REO and out in the already flooded market.
This proposal will keep homeowners in their current home but
switch them to renters. It is a way to stabilize neighborhoods
hit by the foreclosure crisis and curtail neighborhood blight
by keeping a portion of the properties off the market.
Again, I appreciate the other aspects of the Choice
Neighborhoods legislation that have been discussed so far.
There are other ways we can help in the total crisis. So I
would just advocate this is not big enough. We need something
bigger, a bigger hammer to solve the problem.
Thank you for the opportunity to testify.
Senator Menendez. Thank you, Dr. Sanders. I can see you are
originally from Jersey as well.
Mr. Weech.
STATEMENT OF PAUL N. WEECH, EXECUTIVE VICE PRESIDENT FOR POLICY
AND MEMBER ENGAGEMENT, HOUSING PARTNERSHIP NETWORK
Mr. Weech. Mr. Chairman, thank you, And on a personal note,
thank you so much for letting me come testify today. As a
former staffer of this Committee, I spent an awful lot of time
on the dais up there behind you, and I had the privilege to sit
at this table several times during markups of housing
legislation. But it is the first time I have gotten to be here
as a witness, and I really on a very personal level think that
is--I am tickled.
Anyways, I am honored to be here today with you to
represent the Housing----
Senator Menendez. I hope you feel that way at the end of
the hearing.
[Laughter.]
Mr. Weech. Be nice.
Senator Menendez. I am always nice to former staffers.
Mr. Weech. Good. Thank you. Thank you.
I am honored to be here representing the Housing
Partnership Network today and also to discuss the Choice
Neighborhoods Initiative.
The Housing Partnership Network is a member-driven
collaborative of about 99 entrepreneurial nonprofits from all
across the country that build, manage, and finance affordable
housing. Our members include lenders, single-family and multi-
family developers, property owners and managers, and housing
counselors.
Mr. Chairman, on behalf of the network, I want to strongly
support S. 624, the Choice Neighborhoods Initiative Act. I urge
this Committee to report the bill to the full Senate at your
earliest possible convenience.
My main message today is to voice my strong support for the
role of nonprofits in the Choice Neighborhoods process as
reflected in your bill. Too often, when people hear the word
``nonprofit,'' it conjures up an image of a small office
staffed by highly motivated, well-meaning people working hard
to make a difference. Unfortunately, the nonprofit image also
conjures up a picture of an organization that does not have a
lot of financial and operating capacity. In fact, as outlined
in my written testimony, the membership of the Housing
Partnership Network includes some of the strongest nonprofit
developers in the country, many of whom have worked side by
side with the public housing community on HOPE VI projects and
several of whom are already involved in Choice Neighborhoods
implementation and planning grants.
As nonprofits, our members are aligned with the public
sector and its mission goals. Our members care about community
impacts and are dedicated to positive outcomes for the
residents. At the same time, the network members are operating
like business enterprises, bringing good business practices and
efficiency to complicated development efforts.
I would also like to applaud the expansion of Choice
Neighborhoods to allow the redevelopment of both private and
public housing. Whether distressed real estate is publicly
owned or privately owned, it has the same negative effects on
the people in the communities in which it is located. In fact,
I would argue that we jettison artificial division in the
program between publicly owned and privately owned housing. All
Choice Neighborhoods programs should compete based on the
strength and experience of the developer, on the quality of the
partnerships committed to the development, on the ability to
leverage other private resources, and on the outcomes for the
residents. In an open competition, the very best projects will
rise to the top, and the Federal Government will maximize its
social return on investment.
Choice Neighborhoods improves on HOPE VI by requiring and
promoting greater linkages to the other systems that make a
community successful. A successful community includes good
schools, accessible health care, basic retail services like
grocery stores, and access to transportation that connects
residents to jobs.
The Administration deserves significant credit for its work
to break down the silos that divide the Federal agencies, and
the effort to connect this housing with opportunity is also a
place where Congress could do more to support these efforts,
and your bill goes a long way there, Senator.
Finally, I would like to comment on how important it is to
enact the authorization. The lack of permanent authorization
makes the future development environment uncertain. Real estate
development requires extensive planning activities and a long
lead time. Acquiring property and holding it is expensive.
Choice Neighborhoods developments will have an even longer
lead time as developers assemble and formalize new partnerships
across multiple disciplines. When the program funding and rules
are institutionalized, more strong players will step up to the
plate to participate.
In closing, Mr. Chairman, I would like to reiterate how
important the work you are doing is for America's urban,
suburban, and rural communities. In all kinds of places,
federally assisted properties have fallen into distress for any
of a variety of reasons: the natural aging of the assets,
inadequate funding, overleveraging, a change in market
conditions, a change in tenancy sometimes, and poor property
management. Whatever the cause, these properties have had a
negative effect on their residents and the surrounding
communities. The blight at the center of the neighborhood can
keep people from buying homes nearby and can prevent new
investment from coming in. A public investment like Choice
Neighborhoods can change the negative market dynamic and send
the community and, more importantly, the lives of the people
who live in those communities on a positive upward trajectory.
Thank you.
Senator Menendez. Thank you very much.
Mr. Perry.
STATEMENT OF EGBERT L.J. PERRY, CHAIRMAN AND CHIEF EXECUTIVE
OFFICER, THE INTEGRAL GROUP LLC
Mr. Perry. Thank you, Mr. Chairman. I am honored to have
the opportunity to be in front of you today to speak in support
of Senate bill 624, the Choice Neighborhoods Initiative, which
we do believe is a new model for community development.
This initiative would help to transform distressed
neighborhoods and public and assisted projects into viable and
sustainable mixed-income neighborhoods by linking improvements
with appropriate services, schools, public assets,
transportation, and access to jobs. My support comes not only
as a result of my obvious appreciation for the tremendous
benefits that would accrue from a public policy perspective,
but also as a private practitioner in the real estate field.
My firm is 20-years old, and we have been involved in a
number of HOPE VI projects across the country, as well as other
affordable developments, including projects here in the
Nation's capital, Baltimore, and Atlanta, which is our
headquarters.
Now, unlike a lot of real estate firms, we are involved
both as commercial real estate developers as well as community
developers. If you think of commercial real estate development
as focused on transactions and, therefore, intent on maximizing
the returns to the investors and other partners, think instead
of community development as more transformation as opposed to
transactional--transformational because it calls for the
intersection between public policy and private enterprise,
which in and of itself is a very difficult one to take, and
especially for those of us in the private sector, and that has
given rise to the importance of public-private partnerships.
It also means that the goals we seek to achieve are both
hard and soft--hard in the sense that you are trying to achieve
economic returns that make sense for the capital invested, but
soft because you are also trying to address the human
condition, which is a much more challenging undertaking.
This was the problem that the best HOPE VI developments
tried to achieve--this was the solution they were trying to
achieve and this was the problem they were trying to undertake.
And so from our perspective, we seek to do one thing very
important with the Federal dollars: it is to leverage those
dollars as much as possible to attract other local public funds
as well as private debt and equity capital in order to achieve
something that would not be possible if left up to the pure
marketplace, but at the same time we are trying to work as hard
as we can to restore the market forces so that the private
marketplace will carry the development the rest of the way.
Otherwise, you would be intent on looking for unending sources
of public subsidy.
Now, I spoke about our prior HOPE VI development
experience, and I want to cite one example that I think is
indicative of what Choice Neighborhoods intends to build on and
will do things that in HOPE VI were nice to have that now will
become pretty much mandatory under Choice. Those things are, in
the case of HOPE VI, it was possible to successfully do a HOPE
VI development and take on a housing challenge, and a housing
challenge only. You could not do that under Choice. You could
not respond and be received favorably without having addressed
education and some of the other initiatives that are important
to create what we call ``quality-of-life infrastructure.''
And so if you think about it, in this development we took
on a project that was the first public housing project in the
United States, Techwood Homes, and a picture of Techwood shows
1,100 housing units, household income $4,300 per year, and all
of that was not earned income; a crime rate that was 35 times
the average crime rate across the city; and if that was not
enough, a captive elementary school right in the heart of the
development that ensured that we were destroying the next
generation.
So we created a set of shared goals between our firm and
the Atlanta Housing Authority, and those shared goals reflected
the priorities of the authority as well as the priorities of
the private development partner to create something that was
truly transformational. I will tell you it was heroic work in
the sense that it took a lot of heavy lifting and partnerships
that were nice to have under HOPE VI but were not required. It
was a successful development, but in the final analysis, it was
extremely difficult, and we think that Choice Neighborhoods as
an initiative offers the opportunity to make those things so
much easier and encourage the collaboration to take place at
the front end.
The people who speak adversely about Choice Neighborhoods
really have not spoken to people on the ground, whether that is
city governments that see the tax rolls swelling as a result of
this leveraged investment and this revitalization or the
families that have benefited from this.
So I strongly encourage and support the bill and encourage
you to do so as well. Thank you, Mr. Chairman.
Senator Menendez. Thank you very much. Thank you all for
your testimony. Let me flesh out a few more things with you all
so we can more fully develop the record.
Dr. Sanders, I do not believe your testimony disagrees with
the need to address public and private distressed housing
across the Nation, right? Am I correct in that assessment?
Mr. Sanders. You are correct.
Senator Menendez. And it seems to me that the other housing
solutions you cite such as increasing depreciation deductions
on multi-family housing and the Bank of America's mortgage-to-
lease programs are probably good ideas.
Mr. Sanders. Yes, they are supplemental.
Senator Menendez. But they do not really--but my concern is
that they do not really deal with what to do about distressed
public and HUD-assisted housing. So my sense from your
testimony--I am just trying to get the synthesis here--is that
you basically have a view that this is just too small to be
consequential.
Mr. Sanders. It is not big enough.
Senator Menendez. OK.
Mr. Sanders. May I add something else, Senator?
Senator Menendez. Surely.
Mr. Sanders. When they were first doing HAMP over at the
Administration, I met with Treasury and I saw what their
proposal was for HAMP on the housing side, and my proposal
said, ``This is way too small. You are trying to put out a fire
with a glass of water.'' So sometimes these proposals just end
up being very modest, and they could be big. Again, Stanford
University spent this amount just on two buildings. So yes,
this is not big enough.
Senator Menendez. And so the response to that would be if
we were to do nothing, even the suggestions that you have,
which I personally agree with but do not deal with the
distressed public housing market or public assisted market,
would have no impetus. And I just think that the leveraging
that Secretary Henriquez suggested has happened is worthy
beyond the dollars, but I see your point, and certainly we
would love it to be more robust, but we need to start--from my
perspective we need to start somewhere.
Let me ask you, Ms. Maio, in your view how does Choice
Neighborhoods in your own experience--and Jersey City is a
great place because it has been the beneficiary of both HOPE VI
projects as well as the planning on Choice Neighborhoods. How
does it differ from HOPE VI in your experience on the ground in
Jersey City?
Ms. Maio. We are in the middle of a planning grant, and as
I indicated preparing a Choice Implementation Grant
application, and I hope I do not offend anybody by saying this,
I think Choice is HOPE VI on steroids. It is basically the
notion of looking way beyond just the public housing site and
the notion of looking even beyond the benefits to just public
housing residents. It is bringing so many more entities to the
table. It is bringing the private developers, the not-for-
profits, the board of education, I mean, the list goes on and
on and on. And that is why I agree with the Assistant
Secretary. The planning process, doing all of this up front--
and I think that is where Mr. Perry was going. All the work
that has to be done up front to coordinate all these entities,
to come up with a plan that we all agree with.
I will tell you a little story that as part of this
planning process we have to have community meetings, not just
with public housing but all the stakeholders in the
neighborhood. We had a meeting a week and a half ago. They
applauded us. I have never been applauded.
[Laughter.]
Ms. Maio. That was a first. Typically, when you implement a
HOPE VI program, because of the relocation and the negativity
associated with that, it brings out things, you know, in terms
of difficulties with families relocating. The issues of mental
health, that is a grave issue. I could not agree with Dr.
Popkin more on that. I think now that Choice will give us an
opportunity to collaborate with partners that we never dealt
with. We are partnering with the Pre-Natal Consortium. I know
Choice talks about cradle to college. We are talking about
prenatal. We are talking about even before the child is born
and what are the implications for the mother's health, the
implications then for the child's health.
The board of education, the charter school--we have the
charter school and a pre-K now working together using combined
spaces. So making those new connections, making the connections
that were already there, and bringing us to the table as a
convener. We in the public sector have spent our lives
convening meetings, sometimes positive, sometimes not, but we
are used to that give and take. We are used to meetings where
people have criticisms as well as accolades for us. And being
able to put all that together so that--one of the gentlemen
said, this is not a plan, this is a vision, and I think that is
what we want to talk about. This is much bigger than HOPE VI.
I hope I have answered your question.
Senator Menendez. Actually, you answered my follow-up as
well.
[Laughter.]
Ms. Maio. I am from Jersey.
Senator Menendez. Invite me to your next Choice
Neighborhoods planning session so that I can share your
process.
Let me ask you, Dr. Popkin, you mentioned that HOPE VI was
less successful in helping families improve their economic
conditions, including persistently low levels of employment and
poor health conditions. How do you think the Choice
Neighborhoods model incorporates methods to address the
deficiencies that HOPE VI had? Or maybe deficiencies--well, I
do not know. Maybe it did not meet all of the aspirations we
would have had of HOPE VI.
Ms. Popkin. I think HOPE VI was really a housing
intervention with the hope that moving people somewhere else
would have all these other benefits for families. I think the
research we have done shows it is much harder to move those
kinds of outcomes for people who have been very disconnected
from the labor market and are very sick, dimensions. So I think
the kind of work we have done over the past few years where we
have worked on using housing as a platform for services,
integrating services in a coordinated way into a housing
redevelopment shows a lot of promise, and that is the only time
in any of the research I have done I have seen the employment
numbers move or the health numbers stop getting worse.
So I think that kind of effort to really integrate and
coordinate, like Ms. Maio is talking about, holds a lot of
promise.
Senator Menendez. And if you were to synthesize for me--I
mean, you did some of this in your testimony. What are some of
the most important outcomes of your extensive study? If you
were to highlight it for me, what would you say?
Ms. Popkin. Of integrating services?
Senator Menendez. Yes.
Ms. Popkin. We saw employment numbers rise. In all the
years I have been tracking people through HOPE VI and through
the Moving to Opportunity demonstration, I have never seen the
employment change. So with an intensive transitional jobs
program, even in the worst labor market in memory, we saw
employment increase for the participants. We are following up
this year to see if that was sustained after the services were
done.
We saw people's health ratings stabilize, and the main
reasons for that seem to be the regular contact with case
managers and some reduction in substance abuse. And, again, I
have never seen health improvement in any of the research we
have done. I have only seen it get worse as people get older.
What we did not see were any benefits trickling down to the
kids, and that I think is a major concern. There is a lot of
hope with the case management strategy that if you could
improve maternal depression, for example, you will see kids'
outcomes improve, and we did not see that. So the new work that
we are doing is really very intentionally incorporating
services for children and youth. You said prenatal, but really
intensively targeted case management for kids, outreach to
families to get very little kids enrolled in early childhood
programs, and we are in the midst of that evaluation so I
cannot tell you if it is working yet, but we are hoping we will
see some movement on those outcomes.
Senator Menendez. Well, that is interesting because it
seems to me that, of course, in the first instance, what we
were trying to do with HOPE is stop the warehousing of people
and creating senses of community, but there were other
elements, and it seems that some of them were moving in the
right direction. I am hoping that Choice Neighborhoods can go
beyond that.
Mr. Weech, you talked in your testimony about silos that
divide Federal agencies, and certainly my bill works to try to
break those silos down. But you suggest that more can be done.
Can you give me some sense of what you think might be able to
be done?
Mr. Weech. Yes, it is interesting. I thought of that,
Senator, before I came because obviously there is some great
stuff happening through the partnerships on the ground. You are
getting better coordination at the local level between the
housing developers and the other providers who service the
schools, and Choice Neighborhoods is really driving some nice
new partnerships. But it still means having to access the
different delivery systems from the Federal Government.
Now, this Administration deserves a lot of credit. They
have been doing terrific kind of on the administrative level of
trying to coordinate better with the other agencies and the
grant programs. Things that we might consider that would be
more aggressive would be requiring joint NOFAs and single
applications that get sent to all of the Federal agencies
involved and make it much easier for the applicants, say, on a
Choice Neighborhoods application to have assurances of these
other dollars flowing into their projects and cementing the
partnerships on the ground.
Senator Menendez. And you talked about well-managed
affordable housing as a platform for a wider array of positive
social outcomes. How can the Choice Neighborhoods serve as that
platform? And what types of specific outcomes for residents do
you envision possibly resulting from it?
Mr. Weech. Well, rolling back the tape, you know, all of
the nonprofit property managers in my organization are trying
to bring resident services to the people that they are serving,
and the biggest challenge for them is really kind of the
consistency of those funding streams. It is an annual grant-
writing process, it is fundraisers, and it is a big challenge
on services.
What Choice Neighborhoods is doing, what your bill does in
the planning process and in the implementation process, is it
is really starting to get those funding streams more closely
aligned and working together. And so, you know, I am hoping
that Dr. Popkin can back us up on this, but we see already with
the redevelopment process better outcomes in terms of public
safety and people's sense of well-being, people are sleeping at
night, and by carrying these linkages to these more intensive
services, we would like to hope that you have better
educational outcomes for the kids, better job opportunities for
the residents, and better health outcomes.
Senator Menendez. Mr. Perry, I really appreciated your
testimony. I think you presented an honest and sometimes taboo
tidbit about community developers, that while you are committed
to transformation, obviously one of your goals is to indeed
make a profit. So my question is: How does Choice Neighborhoods
help you balance between both of those goals--the legitimate
goal of making a profit and at the same time some of the
societal benefits? Does it?
Mr. Perry. It absolutely does, and thank you for the
question. In fact, as a developer you are often challenged to
take the long view because returns are not immediate. And with
Choice Neighborhoods, what you are able to do is take on those
kinds of things that I call or refer to as ``quality-of-life
initiatives'' that create long-term value. When you or I decide
to buy a home, if we have school-aged kids or think we will, we
certainly want a neighborhood that has a good school. And so in
some respects, if you look at it, when we make that purchase,
we are making an investment decision that has a long lifetime
on it, and so developers focus on wanting to see real estate
values go up over time, so we want to be in those kinds of
communities. Choice allows us to take on blighting influences
in the neighborhood, and by overcoming those blighting
influences, market forces get restored.
I indicated that we have done a number of HOPE VI's, and I
consider Centennial Place to be one of those, and the elements
of that development include a brand-new K-5 math, science, and
technology-themed elementary school, early childhood
development centers, YMCAs, and high-quality housing were in a
neighborhood anchored by two major institutions, Georgia Tech
and Coca-Cola. But they were there when this same site,
Techwood Homes, the worst of the worst, existed. And so it
means that unless the linkages are intentional, well thought
out, and put in place up front, you can still get bad outcomes.
I think Choice ensures that you have to do that homework up
front in order to submit a successful application.
Senator Menendez. Now, I think the public-private
partnership model is critical to the success of Choice
Neighborhoods, and I was intrigued--you mentioned four metrics
that you use to measure your ability to mitigate risk without
ignoring public policy priorities. Can you share the details on
the metrics that you use? Or are they proprietary?
Mr. Perry. They are not, and if they were, they are not
after I submitted the written testimony.
[Laughter.]
Mr. Perry. Certainly we have investors, lenders, and other
partners that have put capital in, so we have to ensure that we
provide at least a reasonable return. Most of the investors in
those kinds of communities understand they are not going to
make maximum dollars, but they at least expect a reasonable
return, so that is important.
We are doing this to help families and individuals make it
into the next generation successfully, and so we have positive
outcomes that we have to achieve with respect to the families
that are impacted by these community rebuilding efforts.
We are also focused on impact in the surrounding
neighborhoods, and I will give you anecdotally--in the case of
Centennial, I will tell you that one and a half blocks south of
our site, a site that was suffering from just total
disinvestment, we now have the largest aquarium in the world, a
$300 million aquarium, a $200-plus million Coke museum, a
complex of high-risk office buildings, condos, hotels, all of
which together total about $2.5 billion of private investment
that I would say would not have been remotely possible if the
redevelopment effort had not been taken on. So that is impact
to a surrounding neighborhood.
And then, finally, the impact to the local jurisdiction,
specifically now you have a site that is 60 acres that was off
of the tax rolls that is now on the tax rolls paying
significant taxes, unfortunately or fortunately, depending on
which side of the table you are; and at the same time, an
impact that is even broader than that site also contributing to
those tax revenues.
So those four are the metrics we look at to bring all of
the stakeholder together to support one of these comprehensive
revitalization efforts.
Senator Menendez. Very helpful.
One final question, Mr. Weech. You said in your testimony
that you do not believe my bill should have separate
distinctions for privately owned versus publicly owned
distressed housing in terms of grants. And while I agree with
you that distressed housing has identical impacts on the people
who live there regardless of ownership, the only thing is I
remain concerned about the negative effects on the physical
state of public housing throughout the country during a time of
declining Federal and State budgets for housing assistance. Is
that a concern that you share?
Mr. Weech. Absolutely, Senator, longstanding--in fact, when
I was here on the Committee, the Commission on Distressed
Public Housing produced its work, and the HOPE VI program came
out of that. And part of the motivation for us on HOPE VI was
to find a way to get the capital we needed to meet the backlog
modernization needs in public housing. So as a network, we are
totally supportive of a variety of strategies to recapitalize
the public housing inventory which has been underinvested in
for a long time.
I think I was making more the point that in a competitive
grant program, it does not make sense to me to have HUD run two
separate grant competitions. Most of the applicants for the
Choice Neighborhoods grants were public housing agencies, which
says to me that the experience they have on HOPE VI, the
quality of development teams they put together, they will
continue to compete very successfully for the grant dollars.
Senator Menendez. Well, thank you all for sharing your
expertise today. I think that the Choice Neighborhoods
Initiative builds on the bipartisan success of the HOPE VI
programs and incorporates what we have tried to do, an
innovative, holistic approach to solving the dire needs of
distressed HUD-assisted housing by leveraging public and
private resources to address not only the distressed housing
but also the community blight that often surrounds failed
housing developments.
In my mind, Choice Neighborhoods ultimately will create
jobs, having a ripple effect, attracting a variety of State,
local, and private investment in revived communities. We have
seen in the last year alone that Choice Neighborhoods has
leveraged about $1.6 billion in private funding, and whenever
we can do that, I think that when you can take even admittedly,
as Dr. Sanders would suggest, a relatively small program but
leverage it to $1.6 billion, that is a good place to be.
I have a series of requests: the testimony of Mayor
Landrieu of New Orleans, a letter of support from the Local
Initiatives Support Corporation, a letter of support from the
Stewards for Affordable Housing for the Future. I ask unanimous
consent that they all be included in the record. Without
objection, they will be.
Senator Menendez. I want to take the Chair's prerogative to
recognize a Rangel Fellow who has worked with us particularly
on this issue and did a lot of work to make this a very
successful hearing. She will be leaving us. So, Oneshia, thank
you very much, Oneshia Herring, thank you very much for your
work, and we appreciate your service.
The record will remain open for a week from today if any
Senators wish to submit questions for the record. I would ask
our panelists if they do receive such questions that you answer
as expeditiously as you can so we can finalize the record. This
has been incredibly helpful, and with the thanks of the
Committee, this hearing is adjourned.
[Whereupon, at 11:44 a.m., the hearing was adjourned.]
[Prepared statements, responses to written questions, and
additional material supplied for the record follow:]
PREPARED STATEMENT OF SANDRA HENRIQUEZ
Assistant Secretary for Public and Indian Housing
Department of Housing and Urban Development
March 27, 2012
Chairman Menendez, Senator DeMint and Members of the Committee,
thank you for this opportunity to discuss the Choice Neighborhoods
program. As you know, with your leadership, Mr. Chairman, in less than
2 years, this program has already had great success helping communities
tackle housing distress and leveraging private dollars. Indeed, the
$130 million of funding we have awarded to thirty-five communities
through implementation and planning grants under this program has
already leveraged a combined $1.6 billion of other investments in those
neighborhoods, over 12 times their total grant award.
Indeed, I am grateful for the leadership that you have shown,
Chairman Menendez, in sponsoring legislation that will formally
authorize Choice Neighborhoods. We are grateful as well to Chairwoman
Waters for her leadership in advancing a similar effort in the House of
Representatives. We want to work with Congress to authorize Choice
Neighborhoods so that local leaders can count on the Federal Government
as a partner in their neighborhood revitalization efforts.
Today, I want to describe the need for authorizing Choice
Neighborhoods, how it builds on the progress of the HOPE VI program and
how it helps local leaders turn around distressed neighborhoods that
are critical to helping regional economies rebound as our national
economy is growing.
Background
Indeed, Mr. Chairman, in many ways we meet at an encouraging
moment: when our economy is growing, jobs are being created and
foreclosures are down. We've added private sector jobs for two straight
years, for a total of over 3.9 million jobs. In the last year, 2.2
million private sector jobs were added--and we've added more jobs in
the last 6 months than any 6-month period in nearly 6 years. Indeed, in
many cities, the tide is turning--unemployment is dropping, vacancy
rates are improving, and investment is going up--but certain
neighborhoods remain stubbornly resistant to change.
Even still, as local leaders dig their communities out of the worst
recession since the Great Depression, we recognize that the cost of
poverty, particularly concentrated poverty, to our society and to our
economic future is very high. Today, more than 10 million people live
in neighborhoods of concentrated poverty--surrounded by disinvestment,
failing schools, troubled housing, and, worst of all, virtually no path
to opportunity for themselves or their children.
In fact, research shows that one of the most important factors in
determining whether or not children will do better financially than
their parents is whether or not they grow up in one of these high-
poverty neighborhoods.\1\ We can predict health, economic, and
educational outcomes of children based on zip code. Further, a
conservative estimate finds that allowing millions of children to grow
up in poverty costs the United States more than $500 billion per year,
or more than 4 percent of GDP.\2\
---------------------------------------------------------------------------
\1\ http://www.economicmobility.org/assets/pdfs/
PEW_NEIGHBORHOODS.pdf.
\2\ Holzer HJ, Schazenbach, DW, Duncan, G, and Ludwig, J (2007) The
Economic Costs of Poverty in the United States: Subsequent Effects of
Children Growing Up Poor. National Poverty Center Working Paper Series
#07-04.
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In a globalized information economy, where a country's success is
built on its human capital development, the conditions of our highest-
poverty neighborhoods, among other factors, are preventing children
from taking advantage of educational opportunities and building the
skills they need. We must revitalize America's high-poverty
neighborhoods in order to educate our way to economic success.
Connected Challenges: Distressed Housing and Neighborhoods
That's why this Administration has pursued Choice Neighborhoods,
which builds on the HOPE VI public housing revitalization program
pioneered by my predecessors at HUD, Secretaries Jack Kemp and Henry
Cisneros.
With strong bipartisan support, HOPE VI has already created over
90,000 public housing units in healthy, mixed-income communities that
were once troubled by distressed public housing--leveraging twice the
Federal investment in additional private development capital and
contributing to an increase of 75 percent or more in the average income
of residents in such communities. This increase might partially result
from higher-income residents moving into the area.
______
Why Choice Neighborhoods?--In 1994, the media spotlight briefly
focused on the nightmarish conditions in one Washington DC
neighborhood's large, distressed housing developments--
Frederick Douglass, Stanton Dwellings, Parkside Terrace and
Wheeler Terrace. To quote a report commissioned by Secretary
Cisneros, Washington Highlands presented a ``worst-case
situation'' for HUD. As the report stated, ``two separate and
distinct HUD program areas.[were] alleged to be contributing to
the deterioration'' of the neighborhood--public housing and
Project-based Section 8.
Thanks to HOPE VI, local and national nonprofits, the DC
government and private developers had ready access to a program
to develop the public housing properties--and had secured other
financing to build a new community center, elementary school,
public library, and a parks and recreation facility. But the
challenge didn't end there, because the two other housing
developments in Washington Highlands didn't qualify for HOPE VI
funding, simply because they were subsidized by different
programs at HUD.
The media didn't make the distinction. The residents didn't
make the distinction. Gangs and drug dealers certainly didn't
make the distinction. And thankfully, the community leaders who
were fighting to turn the neighborhood around didn't make the
distinction either. The only one to make the distinction was
HUD.
______
Choice Neighborhoods builds on HOPE VI by recognizing that the
problem of high concentrations of distressed housing in a single
neighborhood of concentrated poverty is not limited to public housing.
Indeed, many communities are struggling with the challenge of
distressed housing in severely declining neighborhoods. The financial
crisis intensified and expanded disinvestment in these neighborhoods,
causing spillover effects in surrounding areas--an impact that is felt
particularly strongly in neighborhoods with a large amount of
distressed HUD-subsidized housing, whether public housing or assisted
housing.
We have heard from Public Housing Authority executive directors,
mayors, and other leaders across the country that they need a tool that
is sufficiently catalytic to revitalize these neighborhoods, and get
their cities headed in the right direction. Existing funding sources
like CDBG, HOME, LIHTC, and the Rental Assistance Demonstration can
address some symptoms, but are simply not catalytic or substantial
enough to effectively restore high-need neighborhoods. Choice
Neighborhoods is exactly the kind of tool that those local leaders are
asking for, and it is currently helping change the trajectories of
cities across the country.
Building upon HOPE VI by expanding beyond public housing to include
other, almost indistinguishable HUD-assisted housing, Choice
Neighborhoods transforms destabilizing, distressed housing into mixed-
income and professionally managed housing. But Choice Neighborhoods
also provides the flexibility that local leaders need to address their
specific challenges, whether it's a need to improve neighborhood
infrastructure, or ensure high-quality early learning opportunities are
available for young children. Choice Neighborhoods attracts and
leverages private investment, philanthropic funding, and other public
investments, to strategically address these challenges. The first five
Choice Neighborhoods Implementation Grantees have used their $122
million of funding to leverage a combined $1.6 billion, over 13 times
their total grant award. And the 30 additional grantees who have
received funding to spur their plans and preparations for Choice
Neighborhoods revitalization have used their $7.6 million of awarded
funding to leverage $13 million in other funds.
Additionally, in part because of rural set-asides, Choice
Neighborhoods is restoring neighborhoods in smaller cities and towns,
which are experiencing challenges similar to those in larger
metropolitan areas. In towns in rural areas like Meridian, MS and
Salisbury, NC and small cities like Opa-Locka, FL local leaders are
using Choice Neighborhoods to form and implement their own solutions to
regenerate opportunities and their economies.
In short, over the last two decades, HUD made significant strides
in reducing the amount of severely distressed public housing through
the HOPE VI program, which, once all funds are expended, will have
replaced a total of over 100,000 public housing units that were
formerly part of some of the most distressed housing stock. However,
this work is not finished--in part because HOPE VI didn't address the
most distressed HUD Assisted Housing, which Choice Neighborhoods
tackles head on. In order to revitalize neighborhoods with large stocks
of distressed HUD-assisted housing, and provide local leaders with the
flexible, catalytic tool they need, we must build on the success we're
already seeing through Choice Neighborhoods.
______
Grantee Spotlight: Salisbury, NC--Salisbury is a small town in
a rural area of Eastern North Carolina. As a direct result of
Choice Neighborhoods, the Housing Authority and city of
Salisbury have partnered to create a Transformation Plan
targeting the West End neighborhood and Civic Park Apartments,
a 72-unit public housing complex within West End. Civic Park
Apartments suffers from failing building structure, water
infiltration and substandard electrical systems. The City
considers West End its most distressed neighborhood, with a
poverty rate of 28 percent, a neighborhood vacancy rate that is
nearly five times the County average, and a low-performing
middle school. Through their Planning Grant, the Housing
Authority and the City will work with a nationally recognized
planning firm, Stogner Architecture, to develop an actionable
local plan for coordinated investment. They will conduct a
locally based needs assessment, continue to partner and build
their capacity, and create plans for rehabilitating the
neighborhood's public and assisted housing stock, developing an
early childhood education center, and supporting existing
neighborhood assets.
______
Catalyzing Recovery by Targeting Housing and Neighborhoods
Because of the interconnections between housing and the health and
economies of neighborhoods, high-poverty neighborhoods with severely
distressed HUD-assisted housing are strong candidates for return on
Federal investment. Moreover, like other infrastructure, investments in
housing last over the life-cycle of the improvements and generate long-
term payoffs to neighborhoods and local economies.
Under HOPE VI, Choice Neighborhoods' predecessor, we saw that
removing blighted public housing and replacing it with economically
sustainable, mixed-income housing, not only replaced severely
distressed housing, but also reduced poverty, crime, and unemployment;
increased income and property values; and triggered investment,
business growth, and local jobs.
A typical 700-unit redevelopment of distressed public housing
boosts home values, and generates local revenues of $6.5 million over a
20-year period.\3\ A recent study looking at four sites estimated that
three out of the four investments directly increased the surrounding
areas' home values by a total of $14 million to $107 million. Home
values in the fourth site kept pace with the rapid increases in the
local area.\4\
---------------------------------------------------------------------------
\3\ Turner, et al. (2007). Estimating the Public Costs and Benefits
of HOPE VI Investments: Methodological Report. The Urban Institute.
\4\ Zielenbach and Voith. (2010). HOPE VI and Neighborhood Economic
Development: The Importance of Local Market Dynamics''. Cityscape. 12,
No. 1: 99-131.
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Increased home values not only highlight how targeted Federal
investments can improve the surrounding area, but also show the
enormous potential that these investments have to unlock private sector
demand for and investment in these neighborhoods.
Removing isolated, distressed properties and creating communities
with connected, defensible spaces also contribute to decreased crime.
Drops were especially large when this work was done in concert with
police. For example, in Centennial Place in Atlanta, GA, the site of
one project where fellow panelist Egbert Perry led so much great work,
crime dropped by an astonishing 93 percent.\5\ These drops in crime
have often been much larger than those in other comparable local
neighborhoods, and can generate significant savings over the life-cycle
of the housing.\6\,\7\
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\5\ Turbov and Piper. (2005). HOPE VI and Mixed-Finance
Redevelopments: A Catalyst for Neighborhood Renewal. Washington, DC:
Brookings Institution. Vol 8.; From Despair to Hope: Hope VI and the
New Promise of Public Housing in America's Cities. (2009).
\6\ Zielenbach and Voith. (2010).
\7\ Turner, et al.(2007).
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______
Grantee Spotlight: San Antonio, TX--The San Antonio Housing
Authority, the local United Way, and their partners have
secured both a Choice Neighborhoods Planning Grant and a
Promise Neighborhoods Planning Grant for the Eastside area. The
Eastside neighborhood is held back by several interconnected
problems. The neighborhood vacancy rate is more than three
times the County rate and almost half of the area's residents
live in poverty. In addition to distressed public housing, the
neighborhood also struggles with very low performing schools,
including the Sam Houston High School where more than half of
all students drop out. The Housing Authority recognizes that,
even if the housing is replaced, market rate renters will not
move into the area without better schools. As a result of these
aligned Federal investments, the Housing Authority, United Way,
the City, a local university, and their partners are building
on new city efforts and private industry growth and are
crafting an integrated, data-driven plan that links educational
improvements to mixed income housing and neighborhood
revitalization.
______
Targeted investments in housing also create jobs through
construction related work and multiplier effects. Federal investment,
combined with the massive private sector leverage that these
investments marshal, translate into substantial numbers of new jobs,
further contributing to the re-growth of these local economies.
Meanwhile, the continued return of private investment in homes,
businesses, and other infrastructure propels this cycle of increased
jobs and growth. At its core, Choice Neighborhoods is a job-generator:
directly creating jobs through its investments, and indirectly creating
the conditions for private capital--and work--to flow back into
disinvested neighborhoods. We estimate that the Choice Neighborhoods
grants awarded thus far and combined leveraging will create thousands
of jobs.
Using a Proven Approach & Generating Local Solutions
Choice Neighborhoods builds on HOPE VI successes. With HOPE VI,
communities used financing from multiple private and public sources to
remove blighted public housing and replaced it with sustainable mixed-
income developments that cost far less to operate than the original,
ailing housing. This approach attracted new businesses and market-rate
renters and opened up opportunities for families to live in affordable,
decent housing in safer neighborhoods.
However, Choice Neighborhoods has significantly improved upon HOPE
VI by requiring that the housing investment enable and align with a
comprehensive locally driven neighborhood plan. Local leaders, often
including local elected officials and city staff, begin by assessing
the needs in their neighborhood, then craft a plan that is responsive
to those needs, and rooted in effective, evidence-based practices.
Choice Neighborhoods provides them with the flexibility and resources
to execute on those locally driven plans.
Choice Neighborhoods was designed to ensure leaders could carry out
their vision and respond to the specific challenges in their community.
For example, under Choice Neighborhoods distressed housing stock is not
just limited to public housing; often distressed public housing and
other distressed HUD-assisted housing is located side by side. Now,
both types of housing are eligible to be the focus of a grant, giving
local leaders a tool to address whichever types of HUD-assisted housing
present challenges in their communities.
______
Grantee Spotlight: Little Rock, AR--In Little Rock, AR, a
struggling neighborhood just Southeast of the downtown area is
being challenged by both a severely distressed 74-unit public
housing development, Sunset Terrace, and a severely distressed
50-unit HUD-assisted, Project-Based Section 8 development, Elm
Street. Both properties have deteriorating foundations and
structures, have persistent electrical and plumbing problems,
lack defensible spaces, and have other serious design flaws.
The surrounding neighborhood is affected by high crime, poor
schools, and has a vacancy rate that is over three times the
county rate. To address these needs, the Little Rock Housing
Authority has partnered with Volunteers of America National
Services, the owner of the Project-Based Section 8 development,
to engage City and civic leaders in turning around the
neighborhood. They have secured a Choice Neighborhoods Planning
Grant and are working with Quadel Consulting to create a plan
that builds off of other recent development efforts, including
the Department of Education's Promise Neighborhood Program,
Neighborhood Stabilization investments, and HUD's Sustainable
Communities Initiative.
______
Local leaders also need to be able to address the specific
challenges in these neighborhoods when it is not just the housing that
needs fixing. Data show that market rate rental and homeownership
demand in a neighborhood is driven by the quality of the institutions
and assets in that area, such as schools, grocery stores, parks, public
safety, access to transportation, and proximity to jobs and businesses.
Improvements to these assets create the conditions for neighborhood
change.\8\
---------------------------------------------------------------------------
\8\ Weissbourd, Bodini, and He. (2009). Dynamic Neighborhoods: New
Tools for Community and Economic Development. Living Cities.
---------------------------------------------------------------------------
Choice Neighborhoods makes it easier to make this happen. Choice
Neighborhoods provides a framework that recognizes the effective
practice of pairing housing revitalization with a broad intervention in
a target neighborhood. And critically, Choice Neighborhoods provides
the flexibility needed to bring in the public and private partnerships
that will catalyze these changes. The program allows local leaders to
use up to 15 percent of the grant to focus on human development-related
investments in early education, job training, health, and other areas.
Choice Neighborhoods also allows 15 percent of funds to be used for
critical neighborhood improvements, like providing gap financing for
grocery stores, financial institutions, and other retail, and removing
blight caused by vacant private housing. When communities can't
otherwise access sources of funds to address critical needs, these gap-
filling funds represent ``glue money'' that garner new leverage and
hold together key strategies.
Choice Neighborhoods also enhances local flexibility by enabling
the best-poised leader to drive this process. Under HOPE VI, only
housing authorities could apply for grants. This limitation sometimes
left other key players out of the process, making it far too easy to
miss opportunities to streamline local efforts and leverage the
greatest return on an investment. Choice Neighborhoods now encourages
the highest capacity and best situated applicant, whether a mayor or
other local officials, public housing authority, nonprofit, tribal
entity, or private developers to directly apply for a grant.
______
Grantee Spotlight: San Francisco, CA--McCormack Baron Salazar,
a private development company, and the San Francisco Housing
Authority, along with partners like Lennar Homes (a publicly
traded real estate development company), the City, School
District, and Urban Strategies were awarded a Choice
Neighborhoods Implementation Grant to execute their local
vision for the Eastern Bayview neighborhood. Forty percent of
Eastern Bayview residents live in poverty and the neighborhood
suffers from high vacancies, poor schools, and inadequate
access to job centers in downtown and Silicon Valley. The
neighborhood also contains the Alice Griffith public housing
site, a highly distressed collection of barracks style housing
scattered over a 22-acre site. Through their Choice
Neighborhoods grant, the team will build a total of 1,210
mixed-income units, replacing the 256 units of public housing
and creating a new master-planned community with market-rate
and workforce housing. The team has also identified a clear
plan and goals to address their local needs. They are building
upon the San Francisco Unified School District's progress to
improve the quality of their schools and develop complementary
educational opportunities. They have also set employment
targets and are working with the Job Readiness Initiative and
the local Citybuild program to provide job training and
placement. Additionally, the team is bringing in needed
everyday services and jobs by improving streetscapes to attract
retail, removing blighted housing, and pursuing new commercial
assets, fresh food stores, and a new bus rapid transit with
direct connections to key commuter rail lines.
______
Demonstrating Capacity & Leveraging Investments
Choice Neighborhoods establishes a high bar for grantees. The
program is a highly competitive grant program. In the first year alone,
HUD received over 160 applications but awarded only 22 grants.
These grants require local leaders to demonstrate that they have a
solid, high quality plan and the capacity needed to carry it out. Local
leaders must use evidence-based practices and real-time results to
inform their work. Additionally, many of the Choice Neighborhoods
Implementation Grantees have been working with these communities for
years and have strong partnerships with organizations that have
successfully revitalized neighborhoods. For example, in New Orleans,
the Housing Authority and City are working closely with McCormack Baron
Salazar, a private development group that has been involved in turning-
around neighborhoods across the country, as well as Urban Strategies, a
nonprofit group that has successfully convened local partners and
aligned their revitalization efforts.
Local leaders can't succeed in turning around disinvested
neighborhoods without securing necessary partnerships and highly
leveraging their investments. For this reason, Choice Neighborhoods
reserves a substantial number of points in its competitive process for
those applicants who have secured leverage far above their grant amount
and who demonstrate that they are aligning their work with existing
efforts, thereby streamlining resources and achieving greater
efficiencies. This approach rewards leaders who are breaking through
silos and working with public and private agencies, such as school
districts and police, major market actors like private real estate
developers, and anchor institutions like universities and hospitals. As
a result, the five Choice Neighborhoods Implementation Grantees have
leveraged a combined $1.6 billion, over 13 times their total grant
award. This total includes new, refocused, and streamlined funds from
private investors, cities, universities, foundations, and a range of
local partners. Even Choice Neighborhoods Planning Grants that amount
to only $250,000 to $300,000 for each neighborhood have pulled in
substantial amount of leverage. During the past 2 years, Planning
Grantees have leveraged over $13 million in planning funds alone to add
to the $8 million they received in Choice Neighborhoods grants.
______
Grantee Spotlight: New Orleans, LA--In New Orleans, Choice
Neighborhoods will spur the revitalization of the Iberville/
Treme neighborhood, where 52 percent of families live in
poverty, with a plan centered on the transformation of
distressed, highly concentrated public housing into mixed-
income housing that preserves the historic character of the
neighborhood. The partnership, led by the city of New Orleans
and its Housing Authority, will take advantage of the
neighborhood's adjacency to the French Quarter, bringing back
the streetcar named Desire, and expanding the reach of New
Orleans' strong tourism economy to include the musical and
cultural heart of Treme. The project will replace 821 units of
public housing in a new, mixed-income neighborhood, with over
2,400 total units being built. A new hospital, clinic, and
biomedical research facility, tied to integrated job training,
will create critical employment opportunities for neighborhood
residents and expand access to needed health care. And through
the Choice Neighborhoods partnership with the Recovery School
District, Louisiana's fastest-improving school district,
children growing up in the neighborhood will have access to
quality educational opportunities. All of this work is aligned
by a $30.5 million Choice Neighborhoods grant that leverages
over $1 billion in private, nonprofit, and other investments
into the community.
______
Aligning Federal Funding so Taxpayer Dollars Go Further
Choice Neighborhoods also offers a new way for local leaders to
access Federal resources more efficiently. Because Choice Neighborhoods
grants are place-based and driven by local solutions, HUD's grants can
now be used in concert with other Federal investments around places and
local needs.
HUD has been aligning Choice Neighborhoods investments with those
from the Department of Education, Justice, and Health and Human
Services. Both Choice Neighborhoods and the Department of Education's
Promise Neighborhoods, a companion program focused on transforming
educational opportunities, include preferences for applicants who are
coordinating these programs. The programs have also used some of the
same measures and definitions to eliminate the need for local leaders
to deal with redundant reporting requirements and implementation
barriers. Currently, five Choice Neighborhoods Planning Grant
neighborhoods have Promise Neighborhood Planning Grants, including
communities in San Antonio, Texas, Little Rock, Arkansas, and Tulsa,
Oklahoma.
Additionally, the Department of Justice is aligning significant
investments with Choice Neighborhood Grants. The Department of Justice
has devoted $2 million of their resources to support the public safety
strategies of Choice Neighborhoods Implementation Grantees through the
Public Safety Enhancement (PSE) Initiative. Choice Neighborhoods
Grantees have recently submitted applications for the PSE grants, which
will fund local innovations and evidence-based solutions to decrease
violence, gang activity, and illegal drug activity. The Department of
Justice has also committed to aligning its upcoming $15 billion Byrne
Criminal Justice Innovation Program with Choice Neighborhoods.
The Department of Health and Human Services is also incentivizing
alignment with Choice Neighborhoods. Applicants for community health
center improvements are asked to describe how they are working with
Choice Neighborhoods grantees if there is one in their area and receive
points for those collaborations.
Finally, Choice Neighborhoods grantees are aligning substantial
Federal investments at the local level. Some examples include resources
from other Federal agencies such as: Department of Transportation--
Seattle is leveraging $32.3 million from the Seattle Department of
Transportation; Department of Health and Human Services--New Orleans is
leveraging $962,000 from Head Start and $500,000 from a federally
Qualified Health Center; and Department of Labor--Boston is leveraging
$348,600 of Workforce Investment Act funds. The Federal Partnership for
Sustainable Communities has become a key driver in helping
jurisdictions target their neighborhood revitalization efforts and
align them with larger regional plans, providing even greater leverage
out of our Choice Neighborhoods investments.
Through coordinating and co-locating these Federal resources,
Federal funds stretch further and are more effective. For example,
local leaders who improve schools with Promise Neighborhood grants will
be better able to attract market rate renter families back to the area
and prepare the future workforce. Likewise, we expect that students
living in Choice Neighborhoods' safe, decent, affordable housing will
be better able to concentrate on school and achieve higher test scores,
consistent with previous findings of the impact of safe, decent,
affordable housing on educational outcomes.\9\
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\9\ See, e.g., MacArthur's ``How Housing Matters'' series at:
http://www.macfound.org/site/c.lkLXJ8MQKrH/b.6547839/k.163E/
How_Housing_Matters_Recipients_by_Subject.htm#
education.
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Meeting Communities Where They Are
Choice Neighborhoods also meets communities where they are. That is
why Choice Neighborhoods has dedicated a small, but significant portion
of the overall allocation for Planning Grants. These Planning Grants
ensure that those local leaders and communities who are not yet able to
fully undertake a successful neighborhood revitalization can start down
that path. By the end of their planning period these grantees will have
developed a locally driven plan based on their needs and evidence-based
practices, secured the necessary partnerships and leverage, and built
their own capacity and the capacity of their partners and stakeholders
so that they are ready to effectively implement the plan. Planning
Grants also include competitive preferences for communities that could
particularly benefit from these investments, such as rural communities
and neighborhoods that are designated as Promise Neighborhoods.
What Local Leaders are Telling Us
We have heard from mayors, PHA Executive Directors, economic
development directors, and other leaders across the country that they
need Choice Neighborhoods to help unlock the potential of their most
distressed neighborhoods. They need this tool for those neighborhoods
to recover, and for their cities to recover, tapping into the
underlying economic strength of those neighborhoods. The intensity of
the challenges faced in neighborhoods that have been mired in
disinvestment for decades is so strong, it's only through a catalytic
investment like Choice Neighborhoods that those cities can get them on
the right track--and ensure that the kids growing up there can access
the opportunity that every American deserves.
And so, Mr. Chairman, Choice Neighborhoods is about attacking
interconnected challenges with comprehensive, proven tools. It's about
understanding that local problems require locally driven solutions--and
that the Federal Government can serve as an effective partner in
supporting these solutions. It's about making taxpayer dollars go as
far as they can. But fundamentally, it's about making sure every
American gets a fair shot--whoever they are, and wherever they live.
That's what this program is all about--and it's why I so appreciate
this opportunity today. Thank you and I would be happy to answer any
questions.
______
PREPARED STATEMENT OF MARIA MAIO
Executive Director, Jersey City Housing Authority
March 27, 2012
Chairman Menendez, Ranking Member DeMint and Members of the
Subcommittee, my name is Maria Maio and I am the Executive Director of
the Jersey City Housing Authority (JCHA) of Jersey City, New Jersey.
The JCHA is the 2nd largest PHA in New Jersey serving nearly 20,000 low
and moderate income seniors, families and persons with disabilities in
its Public Housing and Housing Choice Voucher Programs.
I greatly appreciate your invitation and am honored to be here
today to testify before the Subcommittee regarding, ``The Choice
Neighborhoods Initiative: A New Community Development Model.'' As you
are aware, the JCHA received one of the first Planning Grants awarded
under the Choice Neighborhoods Initiative as funded through the FY 2010
appropriations bill for the Department of Housing and Urban
Development. Now, we are currently in the midst of preparing an
application for an Implementation Grant under the Choice Neighborhoods
program, and I will have more to say on that later in my testimony.
I also want to commend you, Chairman Menendez, for authoring the
bill to establish and implement Choice Neighborhoods in S. 624, ``the
Choice Neighborhoods Initiative Act of 2011'', which would permanently
authorize the program. Although the program has been funded for the
last few years through the appropriations process, CNI has lacked the
critical legitimacy of an authorized program conferred through the
regular order of Congress. The hearings today will begin to rectify
that deficiency.
As has been mentioned, Choice Neighborhoods builds upon the model
and achievements of the HOPE VI program. HOPE VI has transformed
communities by turning severely distressed public housing into mixed-
income, mixed-use and revitalized communities that serve as long-term
assets in their neighborhoods. HOPE VI has led the way in establishing
new partnerships and leveraging additional resources. HOPE VI has also
been a pioneer and laboratory for neighborhood place-based
redevelopment.
In a MacArthur Foundation study commissioned by the Council of
Large Public Housing Authorities, the study found that HOPE VI
redevelopments have had significant economic and fiscal impacts on
their surrounding areas. The HOPE VI neighborhoods in the study showed
major drops in violent crime rates, increases in household income and
rising home values. The study concluded that HOPE VI is a useful and
cost-effective approach for catalyzing positive economic change in
local communities. This has been true for us.
The JCHA has been awarded three HOPE VI Revitalization Program
grants, which have resulted in 730 constructed units and 275 planned
units in mixed income communities including public housing, affordable
and market rate units. Our HOPE VI communities have served as a model
for developing quality sustainable affordable housing, which has been
applauded by City, State, and Federal officials and residents of public
housing and the broader community and imitated by private and not-for-
profit developers. Our HOPE VI Programs met the goals of rebuilding
severely distressed public housing, deconcentrating poverty, leveraging
non-Federal funds and providing higher quality, efficient affordable
housing with reduced operating costs through the physical
transformation to mixed income developments and a Community and
Supportive Services Program that focused on self-sufficiency
initiatives, with a major goal of reducing unemployment.
The HOPE VI Program also began the organizational transformation of
the JCHA from property manager to developer. Today the JCHA is regarded
as the major affordable housing developer in the city. Severely
distressed public housing has been replaced with lower density housing
that compliments the existing neighborhood, new developments that are
community assets and attracting a diverse economic resident population
in well maintained housing. Critics of the stereotyped public housing
have become the strongest supporters of our new HOPE VI developments.
Much of the success of our HOPE VI Program is also a result of our
strong commitment to Section 3 local hiring initiatives. To date, 500
public housing/local residents have been hired and $22 million has been
targeted to Minority Business Enterprise businesses.
To date, 66% of the public housing units in HOPE VI developments
have been leased to former relocatees. But perhaps the best indication
of success comes from a public housing resident who returned to a HOPE
VI development and expressed how her child can ``sleep in peace, I
don't hear gun shots in the middle of the night''.
Choice Neighborhoods proposes to do the same by transforming
neighborhoods of extreme poverty into mixed-income neighborhoods of
long-term viability. It proposes to revitalize severely distressed
housing, improve access to economic opportunities, leverage investments
in well-functioning services, help foster effective schools and
education programs, public assets, and help improve access to public
transportation and improved access to jobs.
Whereas the major HOPE VI focus was on addressing severely
distressed public housing, CHOICE capitalizes on the strengths of
institutions and assets of the neighborhood, convenes all neighborhood
stakeholders and encourages their input, and pulls together disparate
developments in various stages to plan and implement a singular
comprehensive neighborhood transformation plan through tried-and-true
successful public-private partnerships. It was with these goals in mind
that the JCHA applied for and was awarded a CHOICE Planning Grant last
March.
The CHOICE Neighborhood Initiative is a natural extension of the
HOPE VI Program. It will allow us to expand on our successful public/
private partnerships to develop a comprehensive plan for a neighborhood
that includes the transformation of Montgomery Gardens, our remaining
high rise family development within the broader McGinley Square-
Montgomery Corridor Neighborhood. Montgomery Gardens is currently
perceived as a liability to further renewed investment in the
neighborhood.
Perhaps most importantly, the transformation of Montgomery Gardens
to a new CHOICE community that guarantees one for one replacement
housing, ensures that the inevitable gentrification that will accompany
market rate development will be addressed by the inclusion of
affordable housing resulting in a quality mixed income community. At
the JCHA we made a commitment to one for one replacement housing,
however we recognize it may not be a viable replacement policy for
every community.
Properly implemented, we believe Choice Neighborhoods will be a
broad place-based solution to help address the housing, transportation,
energy, education, workforce, environmental, health, business and
development needs of neighborhoods and communities. We hope that with
passage of this legislation we can work towards a more streamlined
implementation process, and we stand ready to work with HUD on
improving implementation of their current Choice Neighborhoods program.
For example, we must be sure to create the type of environment that
encourages and incentivizes the private sector to participate, and we
must be careful to not be overly prescriptive in the implementation
process. Under HOPE VI, the implementation process was structured such
that public and private partners could come to the table and develop
unique solutions to local housing challenges.
We would like to see this same kind of successful structure adopted
in the Choice Neighborhoods implementation process. We should also
develop an implementation process that creates an intentional alignment
of funding opportunities with other Federal agencies. We believe Choice
Neighborhoods can be vitally important to long-term livability and can
be an effective strategy to promoting sustainable communities for
succeeding generations.
One aspect of the legislation we believe is critically important--
particularly as Choice Neighborhoods continues the legacy of HOPE VI--
is the focus on public housing which we believe must be maintained.
Three years ago, HUD acknowledged that there are three times the number
of distressed developments in public housing as compared to assisted
housing. We appreciate the legislation acknowledging this focus by
designating not less than two-thirds of the amounts made available in
any fiscal year, or two-thirds of the units assisted under Choice
Neighborhoods shall be public housing units.
We would further recommend that applicants for Choice Neighborhoods
should either be, or partner with, a public housing agency; or, if no
public housing agency is available or interested, then other eligible
entities are subsequently considered.
In closing, I thank you for the opportunity to testify today on S.
624 authorizing the Choice Neighborhoods Initiative.
______
PREPARED STATEMENT OF SUSAN J. POPKIN, Ph.D. *
Director, Program on Neighborhoods and Youth Development
Urban Institute
March 27, 2012
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* The views expressed are those of the author and do not necessary
reflect those of the Urban Institute, its trustees, or its funders.
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Mr. Chairman and Members of the Committee, thank you for inviting
me to appear here today. For the past 14 years, I have been studying
the impact of the HOPE VI program on the original residents of public
housing projects that are demolished and replaced. While most of my
research has focused on Chicago, which had more distressed public
housing than any other city in the country, I have conducted research
in 13 HOPE VI sites across the country. The testimony I present here
today draws from four major studies: The HOPE VI Panel Study, which
tracked residents from five sites across the country; the Chicago Panel
Study; the Chicago Family Case Management Demonstration; and the new
HOST Demonstration.
Twenty years ago, dilapidated, high-crime public housing
developments populated by impoverished, female-headed households were a
powerful symbol of the failures of U.S. social welfare policy. HOPE VI
was a key element of a bold effort to transform these public housing
communities and demonstrate that housing programs could produce good
results for residents and communities. The program provided grants to
housing authorities to replace their most distressed developments-those
with high crime rates, physical decay, and obsolete structures-with
new, mixed-income, mixed-tenure communities. In a departure from
earlier efforts to ``rehabilitate'' public housing, HOPE VI sought to
move beyond ``bricks and mortar, and provided funding for supportive
services for residents intended to help them move toward self-
sufficiency and improve their life circumstances'' (Popkin, Levy, and
Buron 2009).
HOPE VI was, at its core, a housing intervention, and there is no
question that the program has changed the face of public housing-
hundreds of those dilapidated structures have been replaced with
attractive new developments, and the program has sparked innovations in
financing and management (Katz 2009; Popkin et al., 2004). The program
succeeded in improving many families' housing situations and quality of
life. Evidence from The Urban Institute's comprehensive HOPE VI Panel
Study and its follow-up, the Chicago Panel Study, shows that many
former residents received Housing Choice Vouchers or moved into mixed-
income developments. These residents now live in better housing in
neighborhoods that are considerably less poor and distressed and
provide safe environments for them and their children.
However, as I will discuss, HOPE VI was less successful in helping
families improve their economic circumstances and was not a solution
for the most vulnerable households. Findings from the Moving to
Opportunity Demonstration (Sanbotmutsu et al., 2011) and from
evaluations of individual HOPE VI initiatives show similar results
(Popkin, Levy, and Buron 2009). These findings suggest that Choice
Neighborhoods and other new comprehensive community redevelopment
efforts that seek to improve the well-being of low-income residents in
distressed neighborhoods need to provide services and support that will
help address the complex challenges many of these families face in
moving toward self-sufficiency.
Better Housing in Safer Neighborhoods
The HOPE VI Panel Study tracked outcomes for 887 residents from
five sites around the United States: Shore Park/Shore Terrace (Atlantic
City, NJ); Ida B. Wells Homes/Wells Extension/Madden Park Homes
(Chicago, IL); Few Gardens (Durham, NC); Easter Hill (Richmond, CA);
and East Capitol Dwellings (Washington, DC) from 2001 to 2005 (Popkin,
Levy, and Buron 2009). The Chicago Panel Study (Popkin et al., 2010a)
continued the research, surveying the Chicago sample.\1\
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\1\ The Urban Institute has just completed a 10-year follow-up with
the Chicago Panel Sample; results from that research will be available
in summer 2012.
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This research concluded that for the most part, HOPE VI succeeded
in its goal of improving residents' life circumstances. The majority
have experienced meaningful improvement in their quality of life as a
result of HOPE VI redevelopment, even though most residents have not
moved back to the new, mixed-income site. HOPE VI Panel Study
respondents who moved to the private market or mixed-income
developments reported substantial improvements in the quality of their
housing. At baseline in 2001, respondents from all five sites reported
intolerable and hazardous housing conditions; when we followed them up
in 2005, their circumstances had improved substantially, and relatively
few reported serious problems with their housing (Comey 2007). Four
years later, findings from the Chicago Panel Study (Buron and Popkin
2010; Popkin et al., 2010a) documented continuing improvements, with
virtually all former residents reporting better housing quality,
regardless of whether they now lived in mixed-income housing, in the
private market with a voucher, or in rehabilitated traditional public
housing.
Even more significantly, HOPE VI brought about dramatic improvement
in respondents' sense of safety. The proportion of Panel Study
respondents reporting ``big problems'' with violent crime and drug
sales declined consistently after relocation. In Chicago, the trends
were even more striking: respondents' perceptions of violence and
disorder in their neighborhoods decreased significantly across every
measure the study tracked, with fewer than 25 percent reporting major
problems with disorder (drug trafficking, sales, loitering, and gangs)
by 2009. Likewise, the proportion of respondents who rated three
indicators of violence (shootings and violence, attacks, and sexual
assault) as a big problem in their community declined by more than 50
percent. The benefits of the improvements in safety are profound, with
residents reporting significantly lower levels of anxiety and fear and
in qualitative interviews, describing being able to sleep better, and
feeling comfortable letting their children play outside (Popkin and
Cove 2007; Popkin and Price 2010).
Finally, respondents who had left traditional public housing living
in communities that were much less poor than their original public
housing developments, even if they were not living in a new mixed-
income development. After relocation, half of those renting in the
private market were living in neighborhoods that had poverty rates
below 20 percent--in Chicago in 2009, a quarter of the sample were
living in communities where the poverty rate was less than 15 percent
(Buron, Levy, and Gallagher 2007; Comey 2007; Popkin et al., 2010a).
Significant Challenges Remain
But this research also highlights the significant challenges that
remain--particularly residents' shockingly poor health and persistently
low levels of employment--problems that will require more intensive,
focused interventions. At every age level, HOPE VI Panel Study
respondents are much more likely to describe their health as fair or
poor than other adults overall and even than black women, a group with
higher-than-average rates of poor health. Further, HOPE VI Panel Study
respondents report high rates of a range of chronic, debilitating
conditions, including arthritis, asthma, obesity, depression, diabetes,
hypertension, and stroke. Mental health is a very serious problem for
these respondents--not only depression, but reported rates of anxiety
and other indicators were also very high: Overall, 29 percent of HOPE
VI respondents indicated poor mental health (Manjarrez, Popkin, and
Guernsey 2007). Four years later, the Chicago Panel Study found a
deteriorating situation, with more than half the respondents rating
their health as fair or poor--a rate four times that of the general
population. Underscoring the severity of the problem, the mortality
rate for these residents was stunningly high--more than twice that of
the general population (Price and Popkin 2010).
In addition to providing an improved living environment, the HOPE
VI program's goals included helping residents attain self-sufficiency.
However, the evidence from our research shows that employment rates
have remained persistently low, averaging just under 50 percent,
although these rates reflect considerable cycling in and out of the
labor market (Levy 2010; Levy and Woolley 2007). Our research shows
that health problems are by far the biggest barrier to employment: in
2005, among working-age respondents, nearly a third (32 percent)
reported poor health, and most of them (62 percent) were unemployed. At
each round of surveys, the strongest predictor of not working was
having severe challenges with physical mobility (e.g., being unable to
climb a flight of stairs or walk four blocks without resting).
Depression also substantially reduced the probability of being
employed, as did having been diagnosed with asthma and being obese.
Finally, even though moving out of distressed public housing has
generally improved residents' well-being, findings from the Urban
Institute's research provide an important cautionary note about the
challenges that these households may face when they move to the private
market with vouchers (Buron, Levy, and Gallagher 2007). Moving out of
public housing presents new financial management challenges: private-
market property managers can be less forgiving of late rent payments
than public housing managers, making it imperative that rent is paid on
time. Also, since utilities are generally included in the rent in
public housing, many former public housing residents are inexperienced
in paying utility bills. They can find coping with seasonal variation
in utility costs, particularly heating costs in the winter or spikes in
gas costs, very daunting. At the 2005 follow-up and again in Chicago in
2009, we found that residents who moved to the private market with
vouchers were significantly more likely to report trouble paying their
utility bills than those still living in traditional public housing
(Levy 2010). Likewise, voucher holders were more likely than public
housing households to report financial hardships paying for food.
However, voucher holders were significantly less likely than public
housing residents to be late paying their rent. It appears that former
residents might be making tradeoffs, choosing to pay their rent on time
to remain lease compliant and delaying utility payments.\2\
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\2\ These findings are consistent with new research from the Moving
to Opportunity Demonstration (Sonbanmatsu et al., 2011).
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The Most Vulnerable Need More Intensive Support
Although it improved the circumstances of many former residents of
distressed public housing, it is also clear that the HOPE VI program
was not as successful in addressing the more complex social and
economic challenges facing these very low-income families. In
particular, it was not a solution for the most vulnerable-the subset of
families who are ``hard to house'' because of multiple, complex
problems that make them ineligible for mixed-income housing or unable
to cope with the challenges of negotiating the private market with a
housing choice voucher. These families are not typical of all public
housing residents, but make up a large share of those living in the
kind of distressed public housing complexes targeted for redevelopment
(Popkin, Cunningham, and Burt 2005; Theodos et al., forthcoming).
These findings led the Urban Institute to work with housing
authorities to test more intensive service models. The Chicago Family
Case Management Demonstration (Popkin et al., 2010b; Theodos et al.,
2012) provided one model for serving the needs of the most vulnerable
public and assisted housing families. The Demonstration developed and
tested an innovative program for serving the needs of the most troubled
public housing residents-households with high rates of physical and
mental health problems, low levels of educational attainment, weak
attachment to the labor force, and high levels of involvement in public
systems (criminal justice, child welfare). The Demonstration, a
partnership of The Urban Institute, the Chicago Housing Authority
(CHA), and Heartland Human Care Services, ran from March 2007 to March
2010, providing residents from the CHA's Dearborn Homes and Madden/
Wells developments with intensive case management services, where
clients saw their case managers at least once a week; a Transitional
Jobs program that provided subsidized jobs and on-the-job training;
financial literacy training; and mobility counseling to support
participants in moving to communities that offered access to better
schools, jobs, and amenities. The Urban Institute conducted a rigorous
evaluation of the initiative.
The Demonstration was remarkably successful in implementing this
wraparound supportive service model for vulnerable public housing
residents. The lead service provider was able to adapt the service
model as residents relocated with vouchers or to mixed-income housing,
while sustaining high levels of engagement. Participants perceived
improvements in service quality and delivery, and providers felt more
effective and engaged. Strikingly, participants reported gains in
employment, health, improved housing and neighborhood conditions, and
reduced levels of fear and anxiety. The average costs for the intensive
services per household were relatively modest, about $3,600 per year or
$1,600 more than the standard CHA service package.\3\
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\3\ Costs varied considerably by level of need and service take-up,
with high-risk participants using the most services.
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Most significantly, despite an extremely difficult labor market,
self-reported employment among working-age Demonstration participants
increased from 49 percent in 2007 to 59 percent in 2009, likely due to
the support participants received from the intensive Transitional Jobs
program (Parilla and Theodos 2010). Also striking was the finding that,
in contrast to the results of the HOPE VI and CHA Panel studies,
Demonstration participants' health did not decline over time. Between
2007 and 2009, participants' health status remained remarkably stable;
in fact, more respondents reported improvements than declines. Further,
while there was no change in the proportion of respondents who reported
poor mental health or clinical depression, respondents did report
significant reductions in anxiety.
As was the case with HOPE VI, Demonstration participants
experienced gains in their housing and neighborhood quality, although
the majority (59 percent) remained in traditional public housing.
Participants perceived that relocating had major benefits, with four
out of five reporting that they live in better-quality housing than at
baseline. Like their counterparts in the HOPE VI studies, Demonstration
participants also moved to neighborhoods where they feel safer, have
more connections with their neighbors, and report less physical and
social disorder (Theodos and Parilla 2010).
Still, it was clear that it was easier to improve residents'
housing and neighborhood conditions than to address their physical and
emotional health. Even the intensive case management and clinical
services the Demonstration provided were only able to make a small dent
in health outcomes for participants--seemingly stabilizing their
overall health, reducing anxiety, and lowering levels of alcohol
consumption. While health stabilized overall, levels of chronic illness
and mortality rates remained strikingly high (Popkin and Getsinger
2010). This modest progress underscores the depth of the challenges
facing these families--and service providers.
Finally, findings from the Chicago Family Case Management
Demonstration paint a disturbing picture of at-risk children and youth
living in extremely troubled households. These children have endured
years of living in violent and chaotic environments; in many cases,
their parents were so distressed--suffering from mental and physical
illness, struggling with substance abuse, dealing with histories of
trauma--that they were unable to shield their children from the worst
effects of the stresses surrounding them. Although the Demonstration
took a family focused approach, no services or case managers were
explicitly dedicated to children and youth; at the follow-up, these
children were still experiencing alarming levels of distress and
exhibiting high levels of behavior problems and delinquency (Getsinger
and Popkin 2010).
Moving to Dual-Generation Strategies
The Chicago Family Case Management Demonstration offers important
lessons on what it will take to help improve the well-being of even the
most vulnerable families. However, even though that demonstration
succeeded in improving many outcomes for adults, the benefits did not
extend to children and youth. Developing effective place-based models
that reach youth is critical not only for improving the lives of
individual children and youth, but also for ensuring the health and
viability of public and mixed-income communities. If youth engagement
strategies are successful, they can reduce critical neighborhood
problems such as vandalism, drug trafficking, fighting, and gang
activity--the disorder and violence that have considerable impact on
other residents and can drive away other residents. The Urban
Institute's new, multisite HOST (Housing Opportunities and Services
Together) Demonstration builds on lessons learned from our earlier
research in Chicago. Launched in December 2010, HOST is testing
innovative, two-generation service models to improve the life chances
of vulnerable low-income families living in public and mixed-income
housing communities. At its core, the demonstration aims to address
parents' key barriers to self-sufficiency--such as poor physical and
mental health, addictions, low levels of literacy, lack of a high
school diploma, and historically weak connection to the labor force--
while simultaneously integrating services and supports for children and
youth. HOST is currently being implemented in three carefully selected
sites in variety of settings--from those serving high need populations
in traditional public housing located in high poverty neighborhoods to
populations in newly developed mixed-income neighborhoods. The three
participating housing authorities and sites are: 1) Chicago Housing
Authority, Altgeld Gardens; 2) Home Forward (Formerly the Housing
Authority of Portland), New Columbia and Humboldt Gardens mixed-income
developments; and the District of Columbia Housing Authority, Benning
Terrace. The New York City Housing Authority is also planning on
joining the demonstration, and will likely plan to serve families in
the Brownsville community.
During its 2-year implementation, the HOST Demonstration will
identify strategies and services that help the families at greatest
risk and offer the best potential for strengthening the community. This
information will inform the Federal Government's multiagency
Neighborhood Revitalization Initiative, which encompasses the
Department of Housing and Urban Development's Choice Neighborhood
program, the Department of Education's Promise Neighborhoods program,
and the Department of Justice's Byrne Criminal Justice Innovation
program. Looking forward, HOST will help answer critical questions
about what works for whom and provide important insight into how local
communities implement similar dual-generation models to improve the
life chances of their most vulnerable children and families.
Incorporating Services into Comprehensive Community Initiatives
Incorporating intensive case management and permanent supportive
housing for the most vulnerable residents into Choice Neighborhoods and
any other comprehensive redevelopment efforts is one way to ensure that
these initiatives truly meet the needs of all public housing families.
The Choice Neighborhoods initiative builds on the successes of HOPE VI
and broadens the scope of revitalization efforts beyond public housing
to the surrounding community, including schools and other types of
housing. However, if this new effort is to be more successful than its
predecessor in improving the lives--and long-term life chances--of the
vulnerable families who suffered the worst consequences of living in
distressed public housing, it is essential that it incorporate
strategies that effectively address their needs (Popkin and Cunningham
2009). None of these solutions are simple, and all will require a long-
term commitment to improving the quality of life for these households,
and ensuring better futures for their children.
REFERENCES
Buron, Larry, and Susan J. Popkin. 2010. ``CHA after Wells: Where Are
the Residents Now?'' CHA Families and the Plan for Transformation
Brief 1. Washington, DC: The Urban Institute.
Buron, Larry, Diane Levy, and Megan Gallagher. 2007. ``How Did People
Who Relocated from HOPE VI with Vouchers Fare?'' HOPE VI: Where Do
We Go from Here? Brief 3. Washington, DC: The Urban Institute.
Cisneros, Henry G. 2009. ``A New Moment for People and Cities.'' In
From Despair to Hope: HOPE VI and the New Promise of Public Housing
in America's Cities, edited by Henry G. Cisneros and Lora Engdahl
(3-14). Washington, DC: Brookings Institution Press.
Comey, Jennifer. 2007. ``HOPE VI'd and On the Move: Mobility,
Neighborhoods, and Housing.'' HOPE VI: Where Do We Go from Here?
Brief 1. Washington, DC: The Urban Institute. http://www.urban.org/
url.cfm?ID=311485.
Getsinger, Liza, and Susan J. Popkin. 2010. ``Reaching the Next
Generation: The Crisis for CHA's Youth.'' Supporting Vulnerable
Public Housing Families Brief 6. Washington, DC: The Urban
Institute
Katz, Bruce. 2009. ``The Origins of HOPE VI.'' In From Despair to Hope:
HOPE VI and the New Promise of Public Housing in America's Cities,
edited by Henry G. Cisneros and Lora Engdahl (15-30). Washington,
DC: Brookings Institution Press: 15-30.
Levy, Diane K. 2010. ``The Limits of Relocation: Employment and Family
Well-Being among Former Madden/Wells Residents.'' CHA Families and
the Plan for Transformation Brief 6. Washington, DC: The Urban
Institute
Levy, Diane K., and Mark Woolley. 2007. ``Employment Barriers among
HOPE VI Families.'' HOPE VI: Where Do We Go from Here? Brief 6.
Washington, DC: The Urban Institute. http://www.urban.org/
url.cfm?ID=311491.
Manjarrez, Carlos, Susan Popkin, and Elizabeth Guernsey. 2007. ``Poor
Health: The Biggest Challenge for HOPE VI Families?'' HOPE VI:
Where Do We Go from Here? Brief 5. Washington, DC: The Urban
Institute.
Parilla, Joe, and Brett Theodos. 2010. ``Moving `Hard to House'
Residents to Work: The Role of Intensive Case Management in
Employment.'' Supporting Vulnerable Public Housing Families Brief
4. Washington, DC: The Urban Institute.
Popkin, Susan J., and Elizabeth Cove. 2007. ``Safety Is the Most
Important Thing: How HOPE VI Helped Families.'' HOPE VI: Where Do
We Go from Here? Brief 2. Washington, DC: The Urban Institute.
http://www.urban.org/url.cfm?ID=311486.
Popkin, Susan J., and Mary K. Cunningham. 2009. ``Has HOPE VI
Transformed Residents' Lives?'' In From Despair to Hope: HOPE VI
and the New Promise of Public Housing in America's Cities, edited
by Henry G. Cisneros and Lora Engdahl (191-204). Washington, DC:
Brookings Institution Press.
Popkin, Susan J., and Liza Getsinger. 2010. ``Tackling the Biggest
Challenge: Intensive Case Management and CHA Residents' Health.''
Supporting Vulnerable Public Housing Families Brief 3. Washington,
DC: The Urban Institute.
Popkin, Susan J., and David Price. 2010. ``Escaping the Hidden War:
Safety Is the Biggest Gain for CHA Families.'' CHA Families and the
Plan for Transformation Brief 3. Washington, DC: The Urban
Institute. http://www.urban.org/url.cfm?ID=412187.
Popkin, Susan J., Mary K. Cunningham, and Martha Burt. 2005. ``Public
Housing Transformation and the Hard to House.'' Housing Policy
Debate 16(1): 1-24.
Popkin, Susan J., Diane K. Levy, and Larry Buron. 2009. ``Has HOPE VI
Transformed Residents' Lives? New Evidence From the HOPE VI Panel
Study.'' Housing Studies 24(4): 477-502.
Popkin, Susan J., Brett Theodos, Liza Getsinger, and Joe Parilla. 2010.
``Creating a New Model for Housing and Services.'' Supporting
Vulnerable Public Housing Families Brief 2. Washington, DC: The
Urban Institute.
Popkin, Susan J., Diane Levy, Larry Buron, Megan Gallagher, and David
J. Price. 2010. ``The CHA's Plan for Transformation: How Have
Residents Fared?'' CHA Families and the Plan for Transformation
Overview Brief. Washington, DC: The Urban Institute.
Popkin, Susan J., Bruce Katz, Mary K. Cunningham, Karen D. Brown,
Jeremy Gustafson, and Margery Austin Turner. 2004. A Decade of HOPE
VI: Research Findings and Policy Challenges. Washington, DC: The
Urban Institute.
Price, David, and Susan J. Popkin. 2010. ``The Health Crisis for CHA
Families.'' CHA Families and the Plan for Transformation Brief 5.
Washington, DC: The Urban Institute.
Sanbotmutsu, Lisa, Jens Ludwig, Lawrence F. Katz, Lisa A. Gennetian,
Greg J. Duncan, Ronald C. Kessler, Emma Adam, Thomas W. McDade, and
Stacy Tessler Lindau. 2011. Moving to Opportunity for Fair Housing
Demonstration Program: Final Impacts Evaluation. Cambridge, MA:
National Bureau of Economic Research.
Theodos, Brett, and Joe Parilla. 2010. ``Assessing Relocating
Counseling for Vulnerable Public Housing Families.'' Supporting
Vulnerable Public Housing Families Brief 5. Washington, DC: The
Urban Institute.
Theodos, Brett, Susan J. Popkin, Joe Parilla, and Liza Getsinger.
Forthcoming. ``Linking Services with Needs: A Typology of Public
Housing Residents. Social Service Review.
______
PREPARED STATEMENT OF ANTHONY B. SANDERS, Ph.D.
Distinguished Professor of Finance
George Mason University School of Management
March 27, 2012
Senator Menendez and distinguished Members of the Committee, my
name is Dr. Anthony B. Sanders and I am the Distinguished Professor of
Finance at George Mason and a Senior Scholar at the Mercatus Center. It
is an honor to testify before this Committee today.
I am here to discuss a proposed Senate bill: S. 624, the Choice
Neighborhoods Bill.\1\ The Bill calls for $350 million in 2012 for
competitive grants to revitalize distressed neighborhoods.
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\1\ http://confoundedinterest.files.wordpress.com/2012/02/choice-
neighborhoods-bill-as-introduced.pdf.
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Three-hundred-fifty million dollars spread over the United States
for distressed neighborhoods is a drop in the bucket. Bear in mind that
Stanford University recently built a business school campus for $345
million.\2\
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\2\ Stanford Graduate School of Business, ``Stanford Graduate
School of Business Launches New Knight Management Center to Enable
Innovative Curriculum and Engage Students Across University,'' April
15, 2011, http://www.gsb.stanford.edu/news/headlines/knightmanagement
centeropens.html.
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This Bill is a revision of the HOPE VI program that was less than a
success.\3\, \4\ As of June 1, 2010 there have been 254 HOPE VI
revitalization grants awarded to 132 housing authorities since 1993-
totaling more than $6.1 billion.
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\3\ U.S. Department of Housing and Urban Development Web site,
``HOPE VI,'' http://portal.hud.gov/hudportal/HUD?src=/program_offices/
public_indian_housing/programs/ph/hope6.
\4\ Carlos A. Manjarrez, Susan J. Popkin, and Elizabeth Guernsey,
``Poor Health: Adding Insult to Injury for HOPE VI Families,''
Metropolitan Housing and Communities Center, June 5, 2007, http://
www.hartfordinfo.org/Issues/wsd/Housing/gblock/HOPEVI_Health.pdf.
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And yet Detroit, Cleveland, and many other inner cities continue to
suffer.
What are the changes to HOPE VI that give us hope that it will
help? These changes are supported by housing advocates, private
developers, HUD, and numerous community groups listed below.
What are the changes to HOPE VI that give them hope?
Expands eligible properties to privately owned and managed
but severely distressed HUD-assisted housing, that serves as
affordable housing for an extended period of time;
Expands eligible applicants to include local governments,
nonprofits, and for-profit developers to apply jointly with a
public entity such as a Public Housing Authority;
Ensures coordination and efficient use of resources by
requiring transformation plans to address not only housing, but
jobs, supportive services, economic development, education,
recreation, and transportation;
Allows conversion of vacant or foreclosed properties to
affordable housing as an eligible project, which addresses the
foreclosed and vacant homes plaguing many communities;
HUD had $265M for this work in 2010 and currently has $165M
available in 2011. The bill would authorize the Choice
Neighborhoods Initiative at $350M as a full replacement for
HOPE VI.
This is another move toward private-public partnerships like we
have with Fannie Mae and Freddie Mac, the mortgage giants in
conservatorship. Private-public partnerships sound like a ``free
market'' solution, but they are not. In 2010, the grant recipients were
housing authorities where $22 million per development was common.\5\
Now the idea is to open up the grants for nonprofits and for-profit
developers to join hands with public housing authorities to deliver the
same public housing solution that has been a failure for decades.
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\5\ U.S. Department of Housing and Urban Development Web site, ``FY
2010 HOPE VI Revitalization Grant Awards,'' http://portal.hud.gov/
hudportal/HUD?src=/program_offices/public_indian_housing/programs/ph/
hope6/fy10awardees.
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After billions of dollars have been spent, Hope VI and this bill
should focus on a better way to help the poor rather than ``a lick of
paint'' approach public housing. After all, $350 million is a drop in
the proverbial bucket.
A Better Way
The Senate and the House have taken an important step recently in
terms of trying to unshackle the free market and encourage job
creation. Job creation is important to solving the problems of our
lower-income households, allowing them to possibly escape public
housing.
But not everyone will be able to escape public housing. While our
public housing is far better than many other countries: a visit to
various public housing projects will convince you that improvements in
public housing are still needed.
The Administration and Congress have set aside staggering amounts
of money for housing and mortgage programs already. HAMP, HARP 2.0, the
Attorney General Settlement of $25 billion, the proposed FHA Refi
program from President Obama's 2012 State of the Union Address, HUD's
2012 Budget of $47,199,000,000,\6\ and the losses of Fannie Mae and
Freddie Mac to taxpayers of $160 billion puts the amount thrown at
housing by various government entities at over $230 billion in recent
years.
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\6\ U.S. Department of Housing and Urban Development Web site, ``FY
2012 Budget Summary,'' February 2011, http://portal.hud.gov/hudportal/
documents/huddoc?id=fy2012budget.pdf.
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Department of Housing and Urban Development Secretary Shaun Donovan
is an advocate of improving the quality of housing projects in the
Nation. But why can't HUD find $350 million in their $47.2 billion
budget through effective budget management? Does HUD not deem Choice
Neighborhoods Initiative important enough to fund in its own budget?
A better way to help solve the problem is to unleash the free
market on housing. Taking a page from the President Reagan (and
Democratic majority) playbook, we should use fiscal policy to increase
the supply of clean, affordable housing by offering accelerated
depreciation deductions on multifamily housing. This will increase the
supply of housing without having to go through housing authorities and
not-for-profits.
The Reagan/Democratic Congressional approach (also known as the
Kemp-Roth ``Economic Recovery Tax Act of 1981'' (Pub.L. 97-34)\7\ was
to increase depreciation deductions on multifamily housing using the
Accelerated Cost Recovery System (ACRS).\8\ Under this legislation, all
property was depreciable for tax purposes over 15 year and for low-
income housing, 200 percent declining balance depreciation was
available. Furthermore, rehabilitation expenditures for low-income
housing could be amortized over 5 years. The Act worked so well that it
was amended in 1986 with the 1986 tax act.
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\7\ U.S. Congress Joint Committee on Taxation, ``General
Explanation Of The Economic Recovery Tax Act of 1981, (H.R. 4242, 97th
Congress, Public Law 97-34),'' December 31, 1981, http://www.jct.gov/
publications.html?func=startdown&id=2397.
\8\ Karl Case, ``Investors, Developers, and Supply Side Subsidies:
How Much is Enough?'' Housing Policy Debate 2 no. 2 (1991), http://
www.wellesley.edu/Economics/case/PDFs/InvestorsDevelopers.apr1991.pdf;
and James Poterba, ``Tax Reform and Housing Market in the Late 1980s:
Who Knew What, and When Did They Know It?'' Federal Reserve Bank of
Boston Conference Series (1992), http://www.bos.frb.org/economic/conf/
conf36/conf36g.pdf.
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We could once again use fiscal policy to help solve the public
housing problem. I would prefer this solution to the ``lick of paint''
approach to revitalizing distressed neighborhoods.
To be sure, such legislation could create additional deficits, but
the simulative effects to the economy and the distressed neighborhoods
could be greater than the lost tax income received by the Federal
Government.
Recently, Bank of America announced a ``Mortgage to Lease'' trial
program.\9\ To avoid foreclosure and yet another property going to Real
Estate Owned (REO) and out in the already flooded housing market, this
proposal from Bank of America will keep homeowners in their current
home but switch them to renters. It is a way to stabilize neighborhoods
hit by the foreclosure crisis and curtail neighborhood blight by
keeping a portion of distressed properties off the market.
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\9\ Anthony B. Sanders, ``Private Market Solution to Foreclosure:
Bank of America's Lease Alternative to Foreclosure,'' Confounded
Interest blog, 22 March 2012, http://confoundedinterest.wordpress.com/
2012/03/22/private-market-solution-to-foreclosure-bank-of-americas-
lease-alternative-to-foreclosure/.
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Between stimulating the construction and rehab or public housing
and initiatives like Bank of America's ``Mortgage to Lease'' trial
program, we now see better potential to fix the problems of public
housing.
Thank you for the opportunity to testify.
______
PREPARED STATEMENT OF PAUL N. WEECH
Executive Vice President, Policy and Member Engagement
Housing Partnership Network
March 27, 2012
Chairman Menendez, Ranking Member DeMint, and Members of the
Housing Subcommittee: Thank you so much for inviting me to testify
today. I am honored to be with you to discuss the Choice Neighborhoods
Initiative and to represent the Housing Partnership Network.
About the Housing Partnership Network
The Housing Partnership Network is a member-driven collaborative of
99 entrepreneurial nonprofits that build, manage, and finance
affordable housing. Our members include mission-driven lenders, housing
developers, property owners and managers, and housing counselors--all
of whom are managing their enterprises based on good business practices
while at the same time working to provide their residents with decent,
affordable places to live in healthy and sustainable communities.
Through peer-to-peer exchanges organized by the Network, our
members come together to share best practices, create innovative
solutions to housing and community development challenges, and launch
collaborative businesses that enhance their sustainability and impact.
Our members are domiciled in 32 different States and in the
District of Columbia. HPN members operate over large geographic areas--
at least on a citywide basis, but more often on a regional, State-wide,
multistate, or even a national footprint. The membership has operations
in all 50 States.
In the Chairman's State of New Jersey we are very pleased to count
the New Communities Corporation (NCC) as a member. Founded in 1967
after the Newark civil disorders, NCC is--like most of the members of
the Housing Partnership Network--among the more comprehensive and the
larger community development organizations in the United States. NCC
has developed and financed 3,000 housing units serving 7,000 residents
in Newark, Jersey City, and Orange. NCC provides day care, alternative
education, social services, job training, employment services, and
health care to residents of the Newark area. A list of all the HPN
members is included in this testimony as Attachment A.
These strong nonprofit organizations are critical institutions at
the center of affordable housing and community development efforts in
many areas of the country. Their combination of mission focus and
business discipline brings a new capacity to deal with longstanding
neighborhood needs. They are, in effect, small- and medium-sized
businesses. HPN members succeed because they are skilled in creating
effective partnerships with State and local governments, private sector
actors, financial institutions, and the civic leaders in the
communities where they operate. They have demonstrated experience as
effective stewards of public resources and as entrepreneurial actors
capable of magnifying the community impact of public funds by using
these to leverage private resources. These organizations demonstrate
that there are economies of scale in this work and they bring financial
strength through the diversification of their revenues.
Collectively, the 99 HPN members have developed or preserved more
than 230,000 affordable homes, financed more than 420,000 homes, and
counseled more than 600,000 families. As a group, the Network members
have over 13,000 employees and nearly a $1 billion in annual revenues.
We estimate that the value of the housing developed or financed by the
membership since 1980 exceeds $67 billion.The point of the statistics
is that the members of HPN are sophisticated, high-capacity social
enterprises with long records of accomplishment in affordable housing
and community development.
Support for S. 624 and the Choice Neighborhoods Approach
On behalf of this group of organizations, Mr. Chairman, I am here
to strongly endorse Senate bill 624, The Choice Neighborhood
Initiatives Act of 2011. I urge the Committee to report this
legislation to the full Senate at its earliest possible opportunity. I
am testifying today for the Network, but would also like to acknowledge
the good work and leadership of the Choice Neighborhoods Coalition of
which we are a member. I attach the Coalition's letter to the Senate
Banking Committee in support of the Choice Neighborhoods program in the
hope that it can also be included in the record with this testimony
(See Attachment B).
The Choice Neighborhoods program builds on the long record of
success of the HOPE VI program. I was here on the Senate Banking
Committee staff when HOPE VI was launched. The program has had a long
and successful run providing local communities with the resources
required not just to renovate and rehabilitate distressed residential
real estate, but to actually transform communities where both the
physical and social systems were not working effectively before the
public investment. With the application of HOPE VI grants, highly
distressed, dysfunctional public housing high-rise communities were
transformed into sustainable mixed-income communities where low-income
and middle-income families could live together and the surrounding
landscape was transformed from one of blight and decay to one that
encourages additional private investment. The positive changes that
occurred in community after community around the country as a result of
the HOPE VI effort are visible in hundreds of before and after photos.
The Choice Neighborhoods Initiative builds on the HOPE VI record of
success but also introduces three important changes that we strongly
endorse. Most importantly, Choice Neighborhoods expands the focus of
the program beyond just public housing developments to include equally
distressed properties under nonpublic ownership. In too many
communities, distressed privately owned HUD-assisted housing resides
side-by-side with the distressed public housing inventory. While we are
entirely sympathetic to the underfunded capital needs of the public
housing inventory and support a variety of strategies to address this
challenge, the insight of Choice Neighborhoods is that whether the
distressed real estate is publicly owned or privately owned, it has the
same negative effects on the people who live in those properties and
those who live in the communities surrounding those properties. Local
governments struggling to combat the infection of blight and spiraling
disinvestment need a tool to reposition this distressed real estate or
the community assets will remain blighted, undervalued, a drain on the
community, and a contributor to poor social outcomes.
The second important innovation is that Choice Neighborhoods builds
on HOPE VI by allowing local governments, nonprofits, and for-profit
developers (in conjunction with the local government) to step into a
lead development role where previously the lead grantee role on HOPE VI
efforts was the sole province of public housing agencies. This is an
important breakthrough. As outlined above there is now within the
affordable housing delivery system a solid and growing set of highly
competent nonprofit institutions capable of not only leading
complicated, multi-sourced, multi-outcome developments, but in many
places providing the Federal and/or local government with a
redevelopment leadership option that has the potential to provide
greater positive outcomes for the community. A strong nonprofit
developer is mission-aligned with the public sector and can often bring
skills and flexibility not available to the public actors. At the same
time, like for-profit development entities, these organizations bring
business-like approaches and the ability to work with and leverage
private capital. As the Choice Neighborhoods program evolves we would
like the government to embrace a more open competition for the
resources where developments and development plans are selected based
on the strength and track record of the counterparties and their
ability to deliver on positive, measurable social and real estate
outcomes on behalf of the residents and the broader community.
Competition should lead to better outcomes. In practice, many HOPE VI
redevelopments were the result of successful public/private/not-for-
profit partnerships. The Choice Neighborhoods program going forward
should continue to encourage these types of partnerships to flourish
where each party brings value and expertise that translates into better
outcomes for the residents and the community.
Finally, the Choice Neighborhoods approach advances on the HOPE VI
model by requiring and promoting even greater linkages and synergies
between the redevelopment effort and other public systems that make a
community successful and increase opportunities for low-income
residents. A successful community includes good schools, accessible
health care, basic retail services like healthy grocery stores, access
to jobs or access to transportation that connects residents to jobs,
and strong support services for the individuals in the community who
need these services. HOPE VI recognized that the revitalization of
distressed public housing with high concentrations of poverty required
services for needy families; Choice Neighborhoods goes further to
advance new connections--especially with its efforts to create linkages
to good schools, educational opportunities, and health care. The
Administration deserves significant credit in its implementation of the
Choice Neighborhoods program in its work to break down the silos that
divide Federal agencies. This is a huge challenge and a place where
Congress could do much to support for these efforts.
There are hundreds of good Choice Neighborhoods projects already
under consideration. In the FY 2010 and FY 2011 funding rounds, HUD
received 236 applications from public, private, and nonprofit sponsors
in 37 States, the District of Columbia, Puerto Rico, and the Virgin
Island. From these, HUD has so far selected 5 proposals for
implementation grants and 30 for planning grants.
The Network's Practitioner-Based Experience with Choice Neighborhoods
The collective experience of HPN members reflects the evolution of
affordable housing policy in this country. Over the past 25 years we
have learned a great deal about what successful affordable housing does
for its residents and the communities in which it is located. Poorly
managed housing is associated with decay and other undesirable social
outcomes. Decent, well-managed affordable housing is the platform for a
wider array of positive social outcomes. Successful housing is housing
that contributes to the success of its residents: this means linkages
to jobs, services, health care, education, and the broader community.
Housing that serves residents of different incomes often works better
than housing that increases concentrations of poverty. Choice
Neighborhoods embodies this learning and advances it.
Nearly all Housing Partnership Network members are engaged in the
spirit of the Choice Neighborhoods agenda through the work they carry
out every day. Our multifamily housing developers are not only
providing high quality affordable places to live for low-income seniors
and families, but are working to link those families to health services
for seniors, after-school programs for kids, and job preparedness
services for heads of households.
Our Community Development Financial Institution (CDFIs) members, in
particular, are providing the financing and capital across a spectrum
of community development activities as part of successful community
revitalization efforts. In addition to financing affordable housing
development, CDFIs in the Network are providing innovative financing to
community facilities like senior centers, loans to child care
facilities that allow the parents of pre-school kids to go to work,
charter schools that are advancing educational opportunities, community
health care facilities providing accessible, lower-cost services, and
investments to link communities to transit.
The Housing Partnership Network would be remiss if it did not
recognize the Chairman's strong leadership in supporting the CDFI
industry and especially his work in sponsoring the CDFI Bond Guarantee
program. The Bond Guarantee program has the potential to revolutionize
the scale and impact of the organizations working so hard to revitalize
America's low-income communities by providing long-term patient
capital. We would like to continue to work with you and your staff to
achieve the successful launch of the CDFI Bond Guarantee program.
Several Housing Partnership Network members are already active
participants in the Choice Neighborhoods effort. Preservation of
Affordable Housing, Inc. (POAH) was the winner of one of the first
implementation grants. POAH received a grant to transform the 504-unit
Grove Parc Plaza Apartments in Chicago into Woodlawn Park, a new mixed-
income, mixed-use development that will be the anchor for a
comprehensive Woodlawn revitalization. With its $30.5 million Choice
Neighborhoods grant, POAH expects to leverage $272 million of total
development in the area over the next 5 years. The city of Chicago is a
key partner in the project's implementation and many other community
organizations will also participate including the Woodlawn Children's
Promise Community (WCPC), the Woodlawn New Communities Program, and
Metropolitan Family Services.
The POAH plan highlights both the capacity of this strong,
national, nonprofit developer to lead a complex development process as
well as the ability of the Choice Neighborhood Grants to catalyze a
major change in a community. Through the process, POAH will demolish
the existing, distressed apartment complex and replace it with a
healthier mixed-use, mixed-income community with 420 units and 95,000
square feet of retail and community space. All of the affordable units
in the original buildings will be replaced 1-for-1 through investments
in other properties in the surrounding neighborhoods, in some cases
repositioning foreclosed and abandoned properties to create an
additional 575 units of mixed-income dwellings.
WCPC and the Urban Educations Institute have designed a
comprehensive educational initiative designed to improve access and
outcomes from early childhood through college, for all Woodlawn
children. A new, 15,000 square foot community resource center at the
heart of the development will feature a satellite Center for Working
Families, providing tailored skill-building and job connections to
residents. And, the project will implement a gang violence initiative
that incorporates a range of data-tested anti-gang enforcement
strategies--including more intensive community policing and
coordination with community watch block clubs and parent school
patrols.
I should also note that an HPN CDFI member, the Low Income
Investment Fund (LIIF), CDFI has provided a loan to POAH in support of
the Woodlawn redevelopment financing package.
HPN members are also leading or participating in Choice
Neighborhoods planning grants. The Community Action Project of Tulsa
County, Inc. (CAP), for example, received a round one Choice
Neighborhoods planning grant as the lead developer. CAP has partnered
with Brightwaters Housing Partners and McCormack Baron Salazar to
revitalize the Eugene Field neighborhood of Tulsa, Oklahoma. The Eugene
Field neighborhood is one of Tulsa's poorest and most isolated
communities. It has experienced a violent crime rate more than double
the rest of the city. The Brightwaters Apartments in the neighborhood
is a 200-unit HUD-assisted property. In addition to redeveloping this
property, the local effort will leverage existing volunteer-led
activity in the community with a state-of-the-art preschool, a fresh
foods market, and a new playground. The project is expected to move
Brightwaters toward a mixed-income development and include expanded CAP
efforts to link the residents of the community to supportive services
and job opportunities.
Columbus, Ohio-based National Church Residences (NCR), a national
nonprofit that owns and manages 20,000 units in 28 States, is a key
partner and co-grantee in a project led by the Columbus Metropolitan
Housing Authority that also includes Ohio State University and the city
of Columbus. Their project would redevelop a 26-acre site known as
Poindexter Village as well as the surrounding neighborhood. Omni
Development in Providence, Rhode Island is participating as a key
partner to the Providence Housing Authority in a planning grant around
a proposed redevelopment of the Olneyville neighborhood. The Community
Preservation and Development Corporation (CPDC) in Washington, DC is a
partner on a planning grant awarded to the District of Columbia Housing
Authority, Kenilworth Courts, and the Kenilworth-Parkside Resident
Management Corporation. CPDC owns and manages the Mayfair apartment
complex which is an anchor asset in the community targeted for
revitalization.
Policy Observations and Proposals
This practitioner-based experience serves to inform the suggestions
we would make to this Subcommittee as you move to mark up the Choice
Neighborhoods legislation. We would like to make these comments for
your consideration:
1. Institutionalize the program. It is important to put an
authorization in place. While the Choice Neighborhoods program is up
and running already, this is due to the actions of the Appropriations
Committee. We are hopeful that Congress will continue to advance this
important work in future appropriations acts. However, an authorization
would provide a more predictable framework for the program. Choice
Neighborhoods implicates many long-standing, difficult public policy
issues. Affordable housing program design is often about choosing
between place-based and people-based strategies, about the sometimes
competing desires to create mobility and choice for households to seek
opportunity versus focusing on building communities of opportunity.
Policy makers need to think through the challenges of balancing the
positive impacts of new investment and regeneration on surrounding
property values with the sometimes negative effects of rising rents and
displacement through gentrification. These are all perennially
challenging public policy issues reflecting competing values. The HUD
program implementation is addressing these issues, but future
policymakers will be tempted to revisit all of these issues and can do
so more readily in the current legal environment. In short, the lack of
a permanent authorization makes the future development environment
uncertain.
Real estate development requires extensive planning activities and
a long lead time. Acquiring land or property and holding it is
expensive. In the case of Choice Neighborhoods eligible efforts, the
upfront costs will, of necessity, be elevated as partnerships across
multiple disciplines are formed and formalized. Many HPN members--who
are the types of organizations one would like involved in the
development process as strong counterparties--have not stepped up to
compete because of the uncertainty in program funding, lack of an
authorization, and uncertain probability of success. When the program
funding levels and its rules are institutionalized the strongest
players in the not-for-profit sector will be more willing to absorb the
upfront costs and take on the risks to compete. A predictable grant-
making process over multiple years will increase the strength of the
applications. It is important for this Committee to put in place an
authorization that provides more permanent guidance and a lasting
authorization framework.
2. Embrace the equivalency of publicly owned and privately owned
distressed housing. Distressed housing has identical impacts on the
people who live there and on the neighborhoods that surround that
property. We would recommend that the Choice Neighborhoods program move
toward a level competitive playing field unrelated to the ownership of
the properties. With limited resources at the Federal level, Congress
should set up the competition for Choice Neighborhoods grants devoid of
set-asides for one type of housing, or one type of developer versus
another. Projects should compete head to head for the public resources
based on the strength and experience of the lead development
counterparty, on the quality of the cross-silo partnerships committed
to the development, on the leverage achieved in bringing in other
nonpublic resources, and on the quality, assurance, and effectiveness
of the intervention on the lives of the residents living in these
communities. The competition for the resources will allow the very best
projects to rise to the top and the Federal Government will maximize
the social return on its public investments.
3. Continue to Encourage Multi-disciplinary Approaches. It is
important that Choice Neighborhoods legislation continue to push for a
more holistic approach to community development at the local level. The
central challenge with Choice Neighborhoods is how to use HUD funding
for a specific real estate transaction to drive a much broader program
of community change. The legislation deals with this challenge by using
HUD funding for housing redevelopment and allowing a certain amount of
the grant to pay for community improvements and services as an
incentive for localities to bring other funding such as transportation,
job training, or school construction. Federal officials must also be
encouraged to act in a multi-disciplinary manner. Resources from the
various relevant Federal programs have different rules, different
timing, and different institutional delivery systems that serve as a
barrier to local leaders accumulating the funds need to address the
range of needs in a particular place. There are reasons for all of the
different program requirements. This is not something that can be
solved quickly or easily. The Administration deserves great credit for
its work to break down the programmatic silos across the range of
relevant Federal agencies. For example, under Secretary Donovan's
leadership, HUD has been working closely with the Department of
Transportation on coordinating housing and transportation policy. More
can be done by Congress to encourage and facilitate the coordinated
delivery of Choice Neighborhoods with other Federal resources.
4. Assure Adequate Funding for Both Choice Neighborhoods and Other
Core Affordable Housing Programs. Within the Housing Partnership
Network there is a significant concern that the increasingly
constrained Federal discretionary appropriations picture is pitting
funding for one Federal housing program against another. This is felt
most keenly through the pressure on critical affordable housing tools
like the HOME program and the project-based Section 8 accounts. Both
programs are essential in the production and preservation of affordable
housing in this country. HOME is a very important and successful block
grant program, providing gap funds that allow development and
preservation projects to move forward. HOME has been wrongly maligned
in the press recently and as a result has suffered some serious cuts in
the appropriations process. We are also working with Congress to
restore the HOME funds and to fully fund the Section 8 program.
In this era of hard caps on appropriations, some perceive that
funding for Choice Neighborhoods could come at the expense of funding
for core programs like HOME and Section 8. This is a false and
unfortunate choice. Each of the programs addresses a different, yet
critical need. We need to identify sufficient funds to do both.
Conclusion
In closing, Mr. Chairman and Members of this Subcommittee, I would
like to reiterate how important the work you are doing is for America's
urban, suburban, and rural communities. In all kinds of places,
federally assisted properties that have fallen into distress for any of
a variety of reasons--the natural aging of the asset, inadequate
funding, over-leveraging, a change in market conditions, a change in
tenancy, and poor property management. Whatever the cause, these
properties have had a negative effect on their residents and the
surrounding communities. The presence of these properties is pulling
down values for blocks and sometimes miles around. The blight at the
center of the neighborhood can keep people from buying homes nearby and
can prevent new investment coming in. A public investment like Choice
Neighborhoods can change the negative market dynamic and send the
property, the community, and most importantly the lives of the people
who live there on a new positive upward trajectory. Thank you.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
______
PREPARED STATEMENT OF EGBERT L.J. PERRY
Chairman and Chief Executive Officer
The Integral Group LLC
March 27, 2012
Good morning Chairman Menendez and Members of the Subcommittee. My
name is Egbert Perry. I am Chairman and Chief Executive Office of The
Integral Group LLC, a private, for-profit real estate firm focused on
implementing urban development projects nationally. I am honored to
have the opportunity to come before you this morning to give you my
testimony in support of ``The Choice Neighborhood Initiative: A New
Community Development Model.'' This initiative would help to transform
distressed neighborhoods and public and assisted projects into viable
and sustainable mixed-income neighborhoods by linking housing
improvements with appropriate services, schools, public assets,
transportation, and access to jobs. My support comes not only as a
result of my appreciation for the obvious public policy case that
underpins the proposed legislation, but also from my experience as a
practitioner in the private development marketplace.
INTRODUCTION
Integral is a 20-year-old firm, headquartered in Atlanta, Georgia.
During that period, we have undertaken projects in many cities across
the country, including Washington, DC, Baltimore and Atlanta.
Unlike many real estate companies, our firm undertakes both a)
conventional (commercial) real estate development and b) community
development. As we all are aware, commercial real estate development is
``transactional'' and, therefore, focused almost entirely on providing
maximum economic returns to the investors and developers from the
transaction in question.
On the other hand, our community development approach seeks to be
``transformational'' with respect to the building of communities. Like
some of the other community developers, we come to this work with a
commitment to transformation, while simultaneously seeking to achieve a
reasonable profit. In order to transform, rebuild or revitalize
communities, our core strategy is designed to leverage resources to
restore the functioning of normal market forces, thereby minimizing the
ongoing dependence on public funding to sustain the communities. This
public-private partnership model is critical to successful community
development initiatives, and the public dollars must be positioned to
leverage private resources and private investment. Since the private
sector partners in these undertakings are expected to bear the
guarantee and market risks, they must be able to manage and mitigate
their risk, without ignoring the public policy priorities. Accordingly,
there are several metrics that we use to measure success. They include:
1. Solid economic returns on invested equity;
2. Positive economic and social outcomes for the community
residents;
3. Positive economic development impact on surrounding/adjacent
communities; and
4. Positive economic impact on the local political jurisdictions
(i.e., City, County and State).
BACKGROUND
It is this multi-faceted solution that the very best HOPE VI
developments tried to achieve over the past 15 years. The Choice
Neighborhood Initiative (``Choice'') improves on the lessons learned
from HOPE VI and provides a path forward for achieving greater and more
long lasting positive outcomes, by making some ``nice to haves'' under
HOPE VI (such as linkages to education, working through nonpublic
housing authorities, etc.) essential elements of the more
``integrated'' Choice program. In time, the success of this program
should be reflected in a consistently higher level of quality in the
development solutions that are produced under Choice.
Our firm has been involved in the development of over 10 HOPE VI
developments nationally, as well as other affordable, non-HOPE VI
developments. This has helped me appreciate the potential benefits that
Choice offers by reflecting on Centennial Place, the nation's first
HOPE VI development. Coincidentally, it was developed on the site of
the nation's first public housing project, Techwood Homes, and an
adjacent public housing project known as Clark Howell Homes. Centennial
Place was implemented by a public-private partnership that included The
Integral Partnership of Atlanta, a joint venture between The Integral
Group and McCormack Baron & Associates another private developer, and
the Atlanta Housing Authority.
At the time of our engagement in 1994, the 60-acre property
contained 1,081 severely distressed public housing units, 674 of which
were occupied by households that had an average annual household income
of $4,300. The remaining units were vacant and uninhabitable. Captive
to the property was an elementary school that was the second poorest
performing elementary school in the Atlanta Public School system
(``APS''). APS was ranked near the bottom of school districts in a
State that was ranked 49th in the country. At the time, the crime rate
at Techwood/Clark Howell Homes was 35 times the average rate for
violent crimes across Atlanta, which according to law enforcement
reports was one of the most dangerous cities in America. Suffice it to
say that, like many others, this site of concentrated poverty was a
ripe breeding ground for producing young people that could never
successfully compete at home or in this globalizing society. Over 50
percent of the residents of the projects were children and
approximately 25 percent were senior citizens. Working adults were
nearly non-existent despite the employment opportunities that existed
down the street at Georgia Tech.
The vision that we conceived for the new community that we would
eventually create sought to answer one basic question: Is it possible
to create a mixed-income (subsidized and market rate) community on the
site such that people of reasonable means would choose to live there?
We answered in the affirmative and set out to do so. At the outset, our
public-private partnership adopted five strategic goals that addressed
the public policy priorities, while employing sound private business
principles as the foundation for planning and implementing the vision,
as follows:
1. Leverage the Federal resources by attracting considerable local
public resources, private philanthropic funds, as well as
private debt and equity capital, to finance, develop and manage
a new mixed-income community that would be healthy and
sustainable over the long term.
2. Ensure that the development efforts positively impacted an area
that was significantly broader that the primary 60-acre site.
3. Pursue a strategy to mainstream the public housing residents into
the broader community, while providing counseling and other
program support to help them in their transition toward self-
sufficiency.
4. Build the human transformation efforts on a foundation of
education, job training and employment.
5. Assist the Atlanta Housing Authority in achieving its own
economic sustainability by generating additional sources of
income to complement the shrinking Federal funding.
Centennial Place, the new community that was eventually created on
the site, contains the following components:
1. Mixed-income residential development, comprised of 738 multi-
family rental units and 45 homeownership units with a mix of
public housing assisted households (40 percent), other low-
income households (20 percent) and market rate households (40
percent); These components were financed using a combination of
Federal funds, private equity and private debt. Infrastructure
improvements (i.e., upgrades to roads, sewers, etc.) were
funded using previously allocated Federal resources, tax-exempt
bonds and direct water, sewer and transportation allocations
from the capital budgets of the city of Atlanta.
2. A complement of coaching and counseling services delivered to
youth, young adults and seniors in assisted households to
facilitate the transition to self-sufficiency.
3. Two early childhood development centers, operated by established
service providers, and funded by private philanthropy; These
centers offer crib to kindergarten development services to all
families;
4. A new high performing public school offering a Math, Science and
Technology theme, as well as an Arts program; This school
represents a collaboration between the private developer, AHA,
the school system and Georgia Institute of Technology (Georgia
Tech).
5. A Family YMCA, funded primarily from private philanthropy, and
operated by the Metro Atlanta YMCA. In addition to some private
foundations, the YMCA enjoys the support of a number of anchor
institutions that call the neighborhood home.
6. Miscellaneous retail and other complementary uses that help to
provide a quality of life experience;
The results have been extremely positive.
1. The presence of the high-performing elementary school has
supported the motto that great schools are essential to create
for a great middle class neighborhood. There has been an
increase in the demand for housing in the school's zone, and
the outlook for real estate values is positive. For the first
time in recent decades, with Georgia Tech and Techwood Homes/
Centennial Place as next-door neighbors, a student that grew up
on the 60-acre site has successfully matriculated to Georgia
Tech. In fact, many of the students that went to Centennial
Place Elementary School have since gone on to highly selective
colleges and universities, including Princeton, Michigan, the
schools at the Atlanta University Center and Howard.
2. The members of the families that lived in community before the
development, and were relocated, have seen significant
improvement in the circumstances of the families receiving
assistance, especially with respect to workforce participation
and educational attainment, as attested to by academic studies
conducted by Georgia Tech, Emory University and Georgia State
University. Further, the ones that exercised their choice to
live in Centennial Place saw even greater gains, particularly
due to the presence of the excellent quality of life
infrastructure (school, YMCA, etc.) that are now readily
available and accessible to them.
3. The significant reduction in the use and cost of public services
(police, fire, social services, etc.) in the zone in which this
site sits is well documented. The area's safety is now on a par
with safe neighborhoods throughout the city.
4. Extensive private development activity in the surrounding area
has taken place. Much of this development would not have taken
place if Centennial Place (which represented (a) a break from
the old model that concentrated poverty, (b) the introduction
of private sector involvement and market principles and (c)
higher expectations and standards for personal responsibility)
had not been created, or if some version of the old Techwood
Homes (even with a facelift) remained. Within a two block
distance south of the site, we have seen the development of the
$300 million Georgia Aquarium, the $200 million-plus World of
Coke Museum, the Children's Museum, and Allen Plaza, the one
million square foot mixed-use development of high rise office
buildings, hotels and condominiums. Other significant private
development projects have been announced, including the planned
National Center for Civil & Human Rights.
5. To the north, Georgia Tech has removed the physical and
psychological barriers that have separated it from its southern
neighbor for over 50 years. It is converting that corridor into
its gateway to the campus. To the west, Coca Cola is expanding
its headquarters and reaching out to the community, having made
significant financial and other commitments to the school.
6. The City and County have seen this very large tract of land
(including the project site) placed on the tax rolls and now
contributes to their tax base after decades of receiving no tax
revenues from these parcels.
7. In one of the ultimate signs of progress, the site and the census
tract in which it sits is no longer considered ``impacted'' and
eligible for the many public incentives for which those
development areas typically qualify.
In essence, most of the ingredients for economic sustainability are
firmly in place.
WHY CHOICE?--THE CASE
Thus, if the answer to the overarching question of--``Why the
Choice Neighborhood Initiative?'' is not already obvious, it can be
explained in the following way:
1. Choice is built around the recognition that solutions should be
developed locally and not at the Federal level.
2. By virtue of the eligibility criteria, Choice ensures that grants
are only awarded to those jurisdictions and communities in
which the spirit of collaboration has been well cultivated and
the critical planning and other ground work that results from
such collaboration is evident before funding support is
provided. This will surely reduce implementation timelines,
though revitalization projects are still time-consuming
undertakings.
3. Many of the critical community building components that were
discretionary under HOPE VI are mandatory under Choice. Those
components tend to be directed toward addressing the poor human
condition that exists in many of the targeted communities, and
which has been facilitated by public policy over decades.
4. Under Choice, there is a clear recognition that public housing
projects are not the only distressed developments where despair
and concentrations of social ills exist. In fact, in many
communities, some of the other subsidized developments are in
as bad a shape, or worse, than much of the public housing
stock. Those developments are often responsible for retarding
neighborhood recovery efforts. Appropriately, Choice offers
local communities a chance to leverage critical Federal
resources on a broader footprint, thereby expanding the
revitalization impacts.
5. Choice ensures that Federal funds are catalytic, and that the
local governments are the primary source of the public funds
necessary to address most of the infrastructure and service
challenges that must be confronted, especially as the
revitalization spreads to the surrounding neighborhood and
requires further public investment.
6. Choice encourages local jurisdictions to seek out the best
partners in the private sector to help conceive and implement
these very complex community development plans that require
attracting resources from private financial institutions.
7. The stimulus effect that Choice funds can have on expanding the
revitalization boundaries results in considerable temporary and
permanent jobs that will be generated.
CONCLUSION
A minority of individuals has suggested that HOPE VI was not
successful, and have gone even further to suggest that Choice is likely
to yield the same results. Undoubtedly, they are measuring the wrong
indicators or are not basing their judgment from observations on the
ground. I strongly argue that:
1. Those individuals have not been talking to the many families
that, though initially skeptical, have found themselves
thriving after what proved to be a brief period outside of
their comfort zone. Though the last few years have adversely
impacted most families of all stripes, the financial condition
of the households that relocated from the housing projects has
improved dramatically since leaving the extreme concentration
of poverty in those old communities. Their children are
performing better in school and are more engaged generally.
2. They have not been talking to the local business communities that
now find opportunities for development and investment in large
swatches of the City that, heretofore, had been considered off
limits or undevelopable.
3. They have not been talking to families that are moving into the
neighborhoods because of the presence of a high-performing
school.
4. They have not been talking to the City and County governments
that have used HOPE VI projects to de-concentrate poverty,
resulting in the simultaneous reduction in the demand for
public services and the increase in the contribution to tax
revenues in those areas of the City where such developments
have been successfully undertaken, generally improving the
livability of the City.
5. They have not been talking to the public redevelopment agencies
that have been able to use their economic development tools to
drive and achieve meaningful community economic development
outcomes across the city by sponsoring the expansion of this
community development approach.
6. They have not been talking to the investors and lenders that find
these communities to be places where they are able to perform
responsible and profitable community investment and lending.
The implementation of the Choice Neighborhood Initiative is not
without risk, as it requires that the goals, objectives and funding of
several Federal departments be aligned so that the aspirations
articulated in Choice can be achieved. Those departments include
Housing & Urban Development, Transportation, Education, Health & Human
Services, among others. Ultimately, the community revitalization
initiatives will be deemed successful when they remove the non-economic
hurdles and re-engage the private development marketplace on the
primary site and in the surrounding areas.
It has been said that for every 1 percent increase in the high
school graduation rate nationally, there is a $1 trillion increase in
the country's GDP over the life of those graduates. The result of
replacing broken and isolated communities in our country with healthy,
nurturing, connected and sustainable communities that unleash more of
our human potential should be near the top of our priorities if we are
serious about regaining our global competitiveness.
Additional Material Supplied for the Record
PREPARED STATEMENT OF MITCHELL J. LANDRIEU
Mayor, City of New Orleans, Louisiana
March 27, 2012
Chairman Menendez, on behalf of the citizens of New Orleans, I am
honored to submit this written testimony for the Subcommittee's
consideration affirming the value of the Choice Neighborhood Initiative
and the transformational impact it will have on the City of New
Orleans. Thank you for affording me this opportunity.
The Choice Neighborhoods Initiative takes an inspired step toward
the way we should build our cities and the way government should act at
the local, State and Federal levels. By working from a place-based
perspective informed by on-the-ground realities of people, New Orleans
is coordinating and targeting responsive investments for tangible
outcomes that benefit its citizens. My administration has adopted the
principles of ``facilitate, link and leverage'' for all projects and
programs--and that's exactly what the Choice Neighborhoods
Implementation Grant will allow us to do in the Iberville/Treme
Neighborhood.
New Orleans has had significant history with Federal housing
initiatives like HOPE VI, which transformed many of our public housing
developments into new communities with their own unique character and
design. And while we are pleased with the improved housing found at
Faubourg Lafitte, Harmony Oaks and Columbia Park, we understand that
these projects still followed a model of concentrated reconstruction
directly on the public housing sites. When the city of New Orleans
responded to the NOFA for the Choice Neighborhoods Initiative
Implementation Grant with its partner, the Housing Authority of New
Orleans (HANO), we recognized the immediate alignment of Choice
Neighborhoods with our own approach to develop housing, neighborhoods
and people in a holistic way. We knew this program would help the city
of New Orleans redevelop the Iberville Housing site not only to benefit
the citizens who will call that historic location home, but to benefit
the city as a whole with targeted linkage to offsite projects we had
begun, such as the recently completed Armstrong Park and the planned
Lafitte Greenway that will link Iberville across town to City Park. We
were proud and excited by the $30.5 million Choice Neighborhoods Award,
even more so by the fact that we can leverage over $1 billion in
private, nonprofit, and other investments into the community.
Essentially, what the Choice Neighborhoods Initiative has allowed
us to do that no previous Federal grant program had, is use public
housing re-development as the launching pad to link and leverage other
Federal and local investments--to go beyond the footprint of the public
housing development and transform the whole neighborhood with infill
housing, blight removal, infrastructure and parks. I am hard pressed to
remember any time when a Federal program and local development strategy
were so well appointed to work together. It seems that our
administration was putting the principles of Choice Neighborhood on the
ground before we even knew about the grant.
One example is the work between the city and our schools, which we
see as a key component in our plan for community revitalization. Our
application brought the City, the Housing Authority and the Recovery
School District together to act as contractual partners, for the first
time, with a mutual goal of improving the lives of residents in the
Iberville development and the surrounding community. We are working
with the Recovery School District to see that our schools build strong
communities and our communities build strong schools. New schools for
both the Recovery School District and the Orleans Parish School Board
are being constructed under a $1.8 billion dollar settlement from FEMA.
Lagniappe Academies, a new K-12 charter school modeled after nationally
renowned Amistad Academy, is intentionally located in Iberville/Treme
to serve students from the Iberville and Lafitte housing developments.
The Recovery School District commits in its Reform Plan within 5
years to: 1) develop teacher and school leader effectiveness; 2)
implement comprehensive instructional reform strategies; 3) extend
learning and teacher planning time and create community-oriented
schools; and 4) provide operating flexibility, and sustained support as
recommended by the U.S. Department of Education's Title 1 Improvement
Strategy. The Choice Neighborhood study area will benefit greatly from
these targets once they are achieved.
With housing as a primary driver of the Choice Neighborhood
Initiative, the city of New Orleans and HANO are committed to replacing
all of the current 821 public housing units and fulfilling the promise
to de-concentrate poverty and increase housing choice for our lowest-
income residents. Moreover, the Choice Neighborhoods program continues
the tradition of HOPE IV's commitment to residents through job
training, education, and assistance moving to self-sufficiency--and
expands into linkages with our public and charter school systems--to
make concerted change that will last into the future--not just the
duration of the grant. This change will also occur through the ultimate
build out of over 2,000 total units across the Choice Neighborhood
area.
The Choice Neighborhoods investment offers the opportunity to link
housing re-development with our work to revitalize health care access
and public safety strategies. When you look closely, you will see that
there is hardly any municipal effort that is not connected to our
Choice Neighborhood physically or programmatically. As a laboratory of
innovation, New Orleans will use this experience to instruct us on
enhancing every neighborhood.
Beyond housing, there are many ways Washington is helping the city
of New Orleans lean forward to leverage the Choice Neighborhood
Initiative, such as supporting our efforts to plan a premier medical
district with the Veteran's Administration and University Medical
Center as anchors. Such districts have been key in revitalizing cities
like Philadelphia, Birmingham, and St. Louis. For New Orleans, the
opportunity to link this investment with our Choice Neighborhood
Initiative training and employment goals is one example of how Choice
Neighborhoods is allowing us to become the city we want to be by
fulfilling the promise for livelihood in our community. In doing so, we
take advantage of ever increasingly scarce government funds to
strategically leverage private resources.
We appreciate that at the Federal Government level, you are working
to link and leverage your systems and programs as well. The city of New
Orleans plans to take full advantage of your connective programing by
applying for a Promise Neighborhoods Grant from the Department of
Education, targeting the Treme neighborhood within our Choice
Neighborhood area. We also look forward to implementing our Public
Safety Enhancement strategy, provided to Choice Neighborhood grantees
by the Department of Justice Byrne Grant. We have also been able to
target our Community Oriented Policing Strategy (COPS) grant funding
from the Department of Justice to the Treme neighborhood.
We are a city that cares about design. In fact, it is a passion of
ours. Within the Choice Neighborhood boundaries of Broad Street, Tulane
Avenue, Rampart Street, and St. Bernard Avenue, our housing development
will meet the high design standard for which New Orleans is universally
known. Like the French Quarter and the musical heart of Treme, the
design of every element of our new developments will be defined by
their contexts, maintaining the best physical qualities of the
Iberville development and its surroundings as blending across the
blocks of neighborhoods known for their unique feel. The bottom line is
wherever we build; we will task the design to attract market rate
tenants to live seamlessly next to public housing residents.
Although we have not yet broken ground on the Iberville site, there
already is demonstrated private activity and interest in the area. A
privately owned theater, the Joy, has been brought back to life and a
national grocer is looking to open a new site in the Choice
Neighborhoods area are just a few of the signs that new private
investment interest is stirring in the Choice Neighborhoods
neighborhood.
If nothing else, this testimony should affirm that we, in New
Orleans have an ambitious plan to improve the lives of the residents
and revitalize the neighborhoods through the Choice Neighborhoods
initiative. We will demonstrate results in a fairly short period of
time. But achieving both near- and long-term goals will require
significant spending. This is a partnership and New Orleans CNI is
dependent upon Federal as well as State and City resources to stimulate
investment across the target area. However, as you know, Federal
funding is shrinking.
In the 2012 enacted Federal budget, the reduction in the HOME
program resulted in the city of New Orleans annual HOME funds being
reduced by over 70 percent and cuts to the Community Development Block
Grant Program reduced our annual allocation by nearly 40 percent. These
cuts are occurring in the face of increasing demand for affordable
housing in New Orleans. This is the same pool from which the city of
New Orleans had targeted investments in the Choice Neighborhood area.
Governments have no choice but to reexamine how they deliver
services and invest their scarce resources. Choice Neighborhoods is the
type of Federal program that might serve as a model for all government
programs to achieve that goal, but we must move forward with eyes wide
open about the needs of our citizens, the capacity of our resources,
and this amazing window of opportunity we have in New Orleans to
facilitate, link and leverage.
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