Affordable Housing Finance

GRAPEVINE

High Hopes for Donovan

AFFORDABLE HOUSING FINANCE • February 2009

BY CHRISTINE SERLIN

President Barack Obama’s choice for secretary of the Department of Housing and Urban Development (HUD) has set affordable housing industry leaders abuzz. After weathering such a tough year, the mid- December announcement came as a welcomed holiday gift for the industry.

Industry leaders have praised the selection of Shaun Donovan and think he’s the right guy to take charge of the embattled agency. He has a resume with both public- and private-sector experience as well as a proven track record as commissioner of the New York City Department of Housing Preservation and Development and former HUD deputy assistant secretary of multifamily housing. It certainly won’t be an easy job for him with all of the challenges the agency faces. But the industry is hopeful, and all eyes will be on him with anticipation of the changes to come (click here for more on Donovan).

For the past year, AFFORDABLE HOUSING FINANCE has been getting industry input and has published several articles with policy proposals for the next president and HUD secretary. We encouraged the next president to appoint a highcaliber leader with extensive knowledge of community development, and Obama did just that.

Some of the proposals specifically designed for the next HUD secretary can be helpful in Donovan’s early days at the agency. He needs to motivate a demoralized workforce while attracting talented new staff; improve the performance of a bureaucracy that is hamstrung by excessive regulations, staffing shortages, overzealous legal staff, and complex work rules; and change a negative and obstructionist culture into one that collaborates with state and local governments as well as private developers to meet pressing housing needs.

We also urge Donovan to dramatically shift HUD’s decisionmaking structure to rely much more heavily on its field offices, giving each more authority as justified by its performance. In recent years, all but the most routine program decisions have required approval by headquarters, creating absurdly long delays and preventing progress on pressing housing needs. High functioning offices should be able to make most decisions without consulting headquarters.

High-level jobs also must be filled quickly with highly capable managers, including experienced housing professionals from state and local government, nonprofit housing groups, and the private sector.

And the 2008 legislation provided nearly $4 billion to deal with home foreclosures. HUD needs to work much faster than it has in the past and delegate authority to state and local governments to make the desired impact. It must ensure all its programs are being used to deal with foreclosures and their communitywide impact before they cause neighborhoods to decline.

Donovan, who was still awaiting confirmation at press time, will take office on a wave of industry support. Can he meet the high expectations? For the industry’s sake, we hope so.