Remaking HUD

Shaun Donovan, President-elect Barack Obama’s pick to head HUD, appears to be an indication that this could be the urban policy president we’ve been hoping for. It’s no secret that for far too long, the department of Housing and Urban Development has been wrought with distractions, lacking a central urban policy, and neglecting things like partnership models, and complex real estate markets.

Inclusionary zoning? What’s that? Anyone? Alphonso Jackson’s comments at a 2006 minority real estate consortium still make my stomach turn:

Why should I reward someone who doesn’t like the president, so they can use funds to try to campaign against the president? Logic says they don’t get the contract. That’s the way I believe.

Donovan comes into this post with a lot going for him, and his appointment along indicates that Obama is trying to re-make HUD. This comes along with this week’s news that Adolfo Carrion, the Bronx, NY Borough President, and once-thought favorite to lead HUD, will be tapped to lead the newly created White House Office of Urban Policy.

In Donovan, we get someone who helped to implement New York City Mayor Michael Bloomberg’s 10-year, $7.5 billion New Housing Marketplace Plan, which is the largest municipal housing plan in the country and a model for how to create and preserve affordable housing for cities across the country.

He knows how to deal with changing housing markets, nonprofit, and city-owned housing developments, and knows about community development, rather than dealing with things in existing systems. Donovan has also helped oversee the New York City Acquisition Fund — a $200 million financing vehicle that allows access to capital for the affordable housing industry. The $200 million NYC Acquisition Fund, which helps NFP and local developers acquire property for affordable housing construction and preservation, could produce up to 30,000 rental, homeownership, and supportive housing units over the next decade.

The originating lenders for the trust fund include organizations like Enterprise, LISC, and the Corporation for Supportive Housing, so Donovan obviously understands Enterprise, LISC, and other intermediaries between borrowers and lenders. He knows how to interest foundations. He knows how to create a fund. He knows what’s involved in matching a public subsidy and integrate it with the public sector.

When Obama announced his decision Saturday, I made some phone calls to some professional and personal acquaintances in the affordable housing and community development field and the initial feedback was largely positive.

“HUD has been asleep at the wheel for about eight years, so this is a good thing,” said Michael Powell, Vice President of Planning, Policy, and Development at the Paterson, NJ-based New Jersey Community Development Corporation. Powell specifically pointed to Donovan’s understanding of the past, present, and future housing market, saying that while’s it’s important to understand that no one is getting construction loans right now, markets tend to be cyclical: “At the time like this,” Powell said, “the best way to deal with the current climate is to create a comprehensive public policy, adding that things like co-ops, and shared equity can take care of housing in the present and future, but that a well-designed public policy will include preparation for the “next wave.”

Kermit Lind’s quote from The Washington Independent seemed to succinctly sum things up. Lind, a Cleveland State University law professor who specializes in housing issues, said: “It’s not often you see the word “competent” and “HUD” in the same sentence.”

That leads us to the sentiment that I find most striking: the fact that Obama did not need to do much to “reform” HUD. For a good, long while, HUD has ostensibly been viewed as by the White House as a meddlesome agency, getting in the way of free markets. While Donovan appears to be a fine choice, HUD reform, is, in part, as simple as January 20, 2009.