Shaun Donovan called on the affordable housing industry to act.

He urged developers to stand up for a new housing finance system that will have affordability and opportunity at its foundation. Specifically, it should include a major fund for the production of affordable rental housing.

“When I say major, I mean more than $5 billion each and every year should be made available out of this legislation,” said Donovan, secretary of the Department of Housing and Urban Development (HUD).

His words came as the Senate Committee on Banking, Housing, and Urban Affairs has been holding a series of hearings on the issue this month.

“The time to make our voices heard is right now,” Donovan said. “Let’s keep up the pressure to put housing finance reform at the top of the legislative agenda.”

He was speaking to developers at Affordable Housing Finance magazine’s annual conference in Chicago. In its 10th year, AHF Live: The Affordable Housing Developers’ Summit drew more than 800 people.

The crowd was a familiar one to Donovan and included a number of his friends and associates. Before becoming the nation’s top housing official in 2009, he served as commissioner of the New York City Department of Housing Preservation and Development, overseeing the allocation of low-income housing tax credits (LIHTCs) in the city.

“We’re passionate about this work because everyone here understands developing affordable housing is about opportunity…” he said. “Giving communities access to quality affordable housing is about fulfilling that basic American promise that you can make it here if you try.”

To make certain that their efforts are not thwarted, Donovan called on developers to build Congressional support for the LIHTC program so that good programs aren’t thrown out with the bad as lawmakers move on tax reform.

“Instead we’ve got to ensure that those tax tools that are working and enhancing opportunity for all remain cornerstones of whatever new system develops,” he said. “No surprise to you: One of the most important of those tools is the low-income housing tax credit and tax-exempt bonds. All of us here know how important these tools have been to increasing the supply of affordable housing, but not everybody else out there knows.”

During his keynote address, Donovan detoured only once from multifamily housing issues. That occurred when when he made a pitch for the embattled Affordable Care Act, which has gotten off to a miserable start with technical problems and low enrollment in its first month. The housing secretary defended the program, connecting it to housing. “One of the leading causes of foreclosure, falling behind on your rent, even bankruptcy, is unexpected health-care costs,” he said, urging the housing community to get behind the health-care plan.

New programs, priorities

Overall, Donovan focused squarely on outlining new efforts to revitalize struggling communities and produce more affordable housing.

One is the LIHTC Pilot Program, which seeks to expedite the time it takes for housing credit deals to access Federal Housing Administration financing. The first 13 deals under the pilot have taken an average of just 86 days from receipt of a completed application to closing, reported Donovan.

This is a significant improvement from the year or longer it has routinely taken for such deals to be approved.

HUD also recently launched the Rental Assistance Demonstration (RAD) program to address a $25 billion backlog in capital needs for public housing. The nation loses about 10,000 public housing units each year, and another 40,000 units are at risk of losing their subsidies and being removed from the public housing inventory.

RAD is the centerpiece of HUD’s strategy to preserve these at-risk public and assisted-housing developments. The first component allows public housing and moderate rehabilitation properties to convert, under a competition limited to 60,000 units, to long-term Sec. 8 rental assistance contracts. The second component allows Rent Supplement, Rental Assistance Payment, and Mod Rehab properties to convert tenant-based vouchers issued upon contract expiration or termination to project-based assistance.

HUD expects RAD to hit its 60,000-unit limit in the early months of 2014. “That is why we need to increase the cap to 150,000 in our 2014 budget,” Donovan said. “That’s going to be decided in the next month or so. We need your help to get that done.”

While the industry needs to do all it can to increase LIHTCs in the country, RAD is also in need of support, he said. (Read more about the latest RAD numbers here.)

Donovan cited a third major initiative—Promise Zones. HUD is among several federal agencies that will lead a comprehensive effort to turn around distressed and high-poverty neighborhoods. Donovan revealed that the first of the Promise Zones will be announced in the coming weeks.

“It is simply wrong in the United States of America that we can put a child’s address into Google Maps and tell them what their future is,” Donovan said.

He acknowledged the need for HUD to remove obstacles in the way of developers building affordable housing. To reduce the agency’s own bureaucracy, HUD is in the midst of reorganizing its multifamily offices around the country. “When it’s done, you will have a more nimble, efficient, and effective multifamily office,” Donovan promised, noting that the agency has been testing a single-underwriter model in the Atlanta hub office and receiving positive response.

Although the speech was mainly an opportunity to update the affordable housing community on key HUD programs, Donovan also used it to recognize the industry for its work.

He emphasized that affordable housing is about creating opportunities for struggling families to secure a better future, seniors to live with dignity, and veterans to return home.

Earlier this year, HUD reported that the number of renters with worst-case housing needs grew to 8.5 million in 2011, an all-time high and an increase of 43 percent from 2007.

“We’re going to fight for a future that makes affordability a pillar of housing finance and tax reform not an afterthought,” he said. “These are goal I know that we all share.”

The road ahead is not easy, he said, but the affordable housing community isn’t about doing things because they are easy.

“It’s about doing things because they are right and they are just,” Donovan said.