#135 May/Jun 2004

House Of Cards

When Mel Martinez announced his candidacy for the Senate from his home state of Florida, it was inevitable that he would give a positive spin to his record as secretary […]

When Mel Martinez announced his candidacy for the Senate from his home state of Florida, it was inevitable that he would give a positive spin to his record as secretary of the U.S. Department of Housing and Urban Development. Martinez is claiming that on his watch HUD successfully promoted minority homeownership and faith-based initiatives, and eliminated waste and fraud. But housing advocates say his accomplishments have been ephemeral at best, as flimsy as a house of cards.

“I am disappointed that Mr. Martinez never got behind a new production program, as it appeared he might when he first arrived in Washington,” says Sheila Crowley, president of the National Low Income Housing Coalition (NLIHC). “He certainly acknowledged the need. But he followed orders from the White House and [Office of Management and Budget] and actually worked against the National Housing Trust Fund.”

And that’s not all he did.

“[W]hat I resent most about the Martinez agenda for HUD is the co-optation of the language of ending chronic homelessness,” observes Crowley. “First of all, it has been all too easy for his declaration to morph into ending homelessness,” she says. “But more egregiously, the rhetoric was never matched with deeds and, I fear, was simply adopted to be used in political campaigns to validate the Bush Administration’s claims to compassionate conservatism.”

Seven Republican candidates are jockeying for position in advance of the August 31 primary for the opportunity to compete for the seat currently held by Democrat Bob Graham, who is retiring. Florida’s Senate race is being heralded as one of the most important in the nation for two reasons. First, the seat is up for grabs, with neither party having a clear advantage. Second, it is likely that, in what is widely predicted to be a close presidential race, Florida will once again figure prominently. Florida, as the 2000 presidential contest revealed, is a closely divided state, and both the Bush and Kerry campaigns will be putting considerable effort into winning the Sunshine State.

Martinez, who has the support of President Bush and an apparently close relationship with him, is perceived as having an edge. A profile of Martinez that ran last year in Orlando magazine derided the importance of HUD, and quoted from a National Journal report card of Cabinet members that gave Martinez an overall C, but an A for carrying out the president’s political agenda.

But even with the president’s support and as a member of the politically active Cuban-American community, Martinez is no shoo-in for the nomination. Earlier this year polls showed him running even with former U.S. Rep. Bill McCollum, a 20-year veteran of Congress. Martinez is running to McCollum’s right (even as he’s being attacked as a liberal by GOP gadfly and professional Clinton-hater Larry Klayman) but should he win the nomination he will have to move towards the center. He hopes his experience at HUD will help him do this. But if the Florida media examines the record – as the Orlando report suggests – the candidate might not get the bump he hopes for.

Of course, HUD suffered from political neglect, managerial shortcomings and outright corruption long before President Bush appointed Martinez to his cabinet in early 2001. But Martinez did not help matters. During his tenure, HUD reflected the ideological and political priorities of the Bush administration: homeownership for moderate-income households, frequently at the expense of investment in public housing and voucher programs meant to serve the lowest income segments of the population.

Concerns about mismanagement and dubious spending priorities continue within HUD, despite Martinez’s claim of cleaning house. There is also a fear factor at work that is pervasive within the Bush Administration. HUD staff members are averse to speaking on the record about even the most noncontroversial matters. For example, last year, I interviewed a HUD official about abysmal conditions in farm-labor camps. He described the conditions and talked freely about some of the efforts by his regional HUD office to address the problem. A couple of weeks later, as the article was going to press, he called me in a near panic, asking that I not quote him by name. “You have to understand the climate I’m working in,” he said.

Few people outside central Florida knew of Mel Martinez before Bush tapped him as HUD secretary soon after being declared president by the U.S. Supreme Court. Martinez brought little government or housing experience to the job, having spent two years as head of Orlando’s housing authority in the 1980s and two years as Orange County’s elected chief executive officer immediately before assuming his HUD post. A Cuban immigrant, Martinez was close to Gov. Jeb Bush and was described as a “pragmatic conservative.” Housing advocates in central Florida described him as “straight forward and accessible.”

His record in county government revealed an occasional willingness to stand up to some Republican constituencies. Developers – many of whom supported his election as county executive – were outraged when Martinez opposed new construction in areas without sufficient school space to absorb new students. But he could also be opportunistic. His support for a light-rail line, for example, wavered when residents of an affluent community that would have been served by the line expressed fear of low-income riders. In standard Republican fashion, Martinez cut services and lowered taxes, and he abolished an office created to give low-income residents a voice in county affairs.

Upon his arrival in Washington, Martinez revealed a sleight-of-hand approach to policy making that bedeviled housing advocates. In January he addressed an NLIHC assembly and voiced support for more housing construction and preserving existing subsidized housing. But he also endorsed what were then proposed budget cuts and failed to outline a strategy for addressing the nation’s affordable housing shortage, homelessness and discrimination in housing markets.

Martinez’s failure to articulate and pursue strategies for increasing federal support for housing development was particularly disappointing. The federal housing assistance budget declined precipitously during the 1980s and showed little improvement during the 1990s. Despite small increases in 1998 and 1999, the federal housing budget dropped from $51.2 billion to $18.5 billion (in inflation-adjusted dollars) between 1976 and 2000. The nature of expenditures changed dramatically as well. In 1976, the bulk of the federal housing budget went towards expanding the stock of subsidized housing. In 1999, most of the budget went to maintaining or improving existing stock and renewing expiring subsidy contracts.

Critics also question the viability of the one Martinez initiative meant to serve the most marginal segment of our population: supportive housing and shelter programs to house the chronically homeless. In large part because of a decline in federal support for housing production, the Millennial Housing Commission found that there was a shortfall of 1.8 million units available to extremely low-income families at the turn of the century, and that it would take 250,000 new units per year to meet their housing needs. Housing advocates and nonprofit developers argue that other policies that Martinez advocated – particularly cuts in affordable housing development and rehabilitation and Section 8 reforms – could force thousands of low-income families into at least temporary homelessness, potentially offsetting any benefits from the proposed $70 million Samaritan Initiative.

By the middle of 2002, Martinez had dropped his pretenses of serious concern about the housing shortage. Speaking at the National Press Club, the HUD secretary said he believed the national shortage was overstated, and that existing housing shortages were primarily the result of local zoning, environmental and market constraints. Low-income housing developers and advocates readily agree that local issues play a role in slowing affordable housing development. But they add that the federal government needs to provide the financial resources needed to jump start production. “Financing affordable housing is ultimately a federal responsibility,” contends Peter Dreier, co-director of the Urban and Environmental Policy Institute at Occidental College in Los Angeles and former head of the Boston Redevelopment Agency. That did not happen on Martinez’s watch. Sheila Crowley of NLIHC adds, “The commitment to solving serious housing problems has all but vanished.”

During Martinez’s tenure, bipartisan support was building for a National Affordable Housing Trust Fund financed by federal mortgage insurance surpluses. Martinez quietly but effectively opposed the proposal. “It’s stealing from Peter to pay Paul,” a HUD official explained to me in 2002. The plan, he argued, threatened to plunge the federal mortgage insurance accounts into bankruptcy.

Martinez instead offered marginal increases in funding for the HOME investment partnership program, which provides assistance for a wide range of housing programs designed and administered at the local level, but not all involving development. There was more rhetoric about reducing local regulatory barriers. Martinez proposed tools to encourage private investment in affordable housing, notably expanded use of the Low Income Housing Tax Credit. Unfortunately, tax cuts on dividends and other forms of investment income tended to cancel out the incentive contained in the housing credit program.

This was not the only sign that Martinez and the Bush administration took an unfriendly view of public housing, subsidized development and rental-assistance programs. Consider the following:

At various times Martinez proposed zeroing out HOPE VI, the program that replaces aging public-housing towers with low-rise townhouses and apartment buildings, and cutting funds to the Public Housing Capital Fund. Martinez favored the creation of a Public Housing Reinvestment Initiative to facilitate private financing. The Senate rejected the reinvestment initiative and rescued HOPE VI, but the overall trend under Martinez was to decrease investment in maintaining and revitalizing existing public housing stock.

In yet another example of the persistence of HUD mismanagement, a $250 million “accounting error” led to a 30 percent cut in the operating subsidy for public housing agencies in FY 2003. Martinez’s HUD also delayed payment to nonprofit and tenant groups that did work under a pair of grant programs. HUD froze the program and refused to pay invoices for expenses already incurred on the apparently false assumption that to do so would violate federal regulations.

Martinez advocated administration proposals to reduce voucher funding and reinvent the Housing Choice Voucher Program (Section 8) as a Housing Assistance for Needy Families (HANF) program modeled after the welfare reform act of 1996, and funded by block grants to the states. The proposal was poorly thought out, premised as it was on the belief that welfare recipients and beneficiaries of housing assistance are the same people. In fact, HUD data shows that 80 percent of voucher recipients are employed, disabled or retired, and 73 percent are extremely low income. Proponents of welfare reform successfully sold the Temporary Assistance for Needy Families program on the assumption that welfare rolls would continue to decrease as beneficiaries entered the workforce. With housing voucher recipients already in the workforce or on a permanent fixed income and facing rising rents, there is virtually no chance that demand for subsidized housing will decrease. Without guaranteed increases in block grants – a highly unlikely proposition – states would be unable to afford to administer HANF and funds would eventually dry up. In fact, the administration continues to pursue the block grant idea and is proposing a series of cuts in Section 8 funding, which, the Center on Budget and Policy Priorities suggests, could “shrink the program by 250,000 families next year and by about 600,000 families in 2009.”

While support for existing housing programs waned, the Bush administration wanted to demonstrate its “compassionate conservatism ” through a pair of new initiatives, one to increase homeownership, especially among minorities, and the other to serve the long-term homeless population.

The administration’s homeless initiatives include grants for local programs that provide permanent and transitional housing, temporary shelter, job training, healthcare, mental-health counseling, substance-abuse treatment, child care and other supportive services to local programs and agencies. HUD granted at least $1 billion annually in 2001, 2002 and 2003. In addition, HUD launched a $35 million collaborative program with the Departments of Health and Human Services and Veterans Affairs to provide shelter and care to the chronically homeless.

Homeless advocates and service providers have applauded the homeless initiative, up to a point. Participants in a recent University of California discussion of homeless programs agreed that the initiative should help them provide housing and supportive services to many of the long-term homeless. But they joined other housing advocates in questioning the ability of the government to make a serious dent on the broader problem of homelessness as long as it remains committed to a minimal investment in affordable housing development and to policies that could gut already insufficient voucher programs. Homelessness, they said, is a possible outcome for at least some of the families who lose their vouchers or who can’t find a place in public housing.

More than anything else, Martinez emerged as a leading advocate for programs meant to enhance homeownership opportunities for moderate-income Americans, particularly members of racial and ethnic minorities. The flagship policy for this effort has been the American Dream Downpayment Initiative. Martinez trumpets the downpayment initiative as a major achievement of HUD during his tenure, but Congress failed to provide the level of support the administration had requested. President Bush requested $200 million for the program in 2004, but Congress allocated just $162.5 million for the two-year 2003-2004 period.

“If the Act were truly a priority for the president, [Bush] could have weighed in with Congress and pushed for full funding in each year,” the NLIHC declared in a recent statement. Official Washington, however, is providing little leadership on housing issues. “Housing is not on the political radar,” says Sandra Newman of Johns Hopkins University, who made her remarks at the University of California’s annual housing conference, drawing a comparison to the heated political debates surrounding healthcare reform.

The comparison to the Clinton White House is particularly striking. Although the outcome was not always what housing advocates wanted, at least there was an ongoing debate about housing and its impact on our communities. Clinton’s HUD secretaries, Andrew Cuomo and Henry Cisneros, were engaged in that political and intellectual discourse. That sort of creative dialogue did not take place in Martinez’s HUD, which ultimately failed to forge a serious, comprehensive policy response to the range of housing problems confronting the nation. If Martinez attempts to sell Florida voters on his performance in Washington, these voters would do well to consider how little Martinez accomplished in an agency where so much remains to be done, not only to meet the housing needs of the nation’s poorest residents but to build stronger communities.

A Whiff of Scandal

Scandal has often surrounded HUD secretaries and the department as a whole. To a large degree, Martinez escaped serious charges of wrongdoing. But he’s recently attracted criticism for allegedly using HUD funds to pay for political trips to Florida. During his last 21 months in office, Martinez traveled to Florida at least 12 times at government expense. In comparison, Martinez visited New York eight times, California five times, North Carolina four times and Texas once.

The Florida trips received newspaper and television coverage that lifted Martinez’s profile in the state. During these trips, some of which were partly funded by political organizations, Martinez carried out job-related duties and delivered public speeches. Both Florida Democratic Chairman Scott Maddox and a campaign spokes-woman for Bill McCollum, Martinez’s leading opponent for the GOP nomination, voiced concern that the Florida trips may have abused taxpayer money and called for a federal inquiry.

James Goodno


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