Advocates Get Behind HUD Nominee

AFFORDABLE HOUSING FINANCE • June 2008

BY BENDIX ANDERSON

WASHINGTON, D.C. - Housing advocates are ready to think well of Steve Preston, the new nominee for secretary of the Department of Housing and Urban Development (HUD).

“We are determined to give him a chance and hope for the best,” said Danna Fischer, legislative director for the National Low Income Housing Coalition, a housing advocacy group.

Preston has served as the administrator of the U.S. Small Business Administration (SBA) since July 2006. His tenure earned him a reputation as an effective reformer of government bureaucracies.

“Many government challenges can be addressed through operational solutions and basic private-sector management techniques,” wrote Preston in a February 2007 editorial for the National Review.

Preston has spent much of his time at SBA offices in New Orleans and the Gulf Coast, working to improve processes in the agency’s Disaster Assistance Program. He reduced by 90 percent the backlog of more than 120,000 loans that piled up in the 11 months after Hurricane Katrina hit the Gulf Coast. The average age of backlogged loans has dropped from two-and-a-half months then to fewer than eight days.

HUD, which has become notorious for long delays when it comes to the administration of its multifamily housing programs, could benefit from this kind of reform.

However, advocates caution that Preston will not have enough time between now and January 2009 to overhaul the agency. Still, he may generate ideas that could be implemented by future HUD secretaries.

“We would hope and expect that he would stabilize and reinvigorate HUD,” said Conrad Egan, president and CEO of the National Housing Conference.

“We’re not expecting him to do any longrange reforms or initiatives.”

Before taking the lead at SBA, Preston worked for 25 years in financial and leadership positions in The ServiceMaster Co., First Data Corp., and Lehman Brothers.

He received an MBA from the University of Chicago. Preston has no experience in housing, unless you count small housing developers who received assistance under SBA programs.

If confirmed by the Senate, Preston will lead HUD for less than a year, until the George W. Bush presidency ends. The short time is sure to be intense. The national crisis of high home loan foreclosures has put HUD in the spotlight. Several proposals now before Congress would give the agency a starring role in the fight-against-foreclosures drama likely to unfold this year.

Some experts and advocates interviewed for this story, however, question whether HUD has the capacity to play the role of rescuer after more than 20 years of staffing cuts and under-funding.

Preston will also have to defend the federal budget that the Bush administration submitted to Congress earlier this year.

Housing advocates have faulted the budget for under-funding housing and community development programs that include project-based Sec. 8, Sec. 8 vouchers, public housing operating and capital funding, and the Community Development Block Grant program. Advocates have also challenged the budget for once again proposing to eliminate funding for the HOPE VI program aimed at revitalizing distressed public housing.