For years, the Department of Housing and Urban Development (HUD) has been Washington, D.C.'s incredible shrinking agency, beaten down by scandals, staff losses, budget cuts, and a diminished mandate.

Shaun Donovan, New York City's highly regarded housing commissioner, has the ability and the opportunity to change that, according to a broad range of affordable housing experts. President Barack Obama tapped Donovan to lead HUD on Dec. 13.

“Obama has elevated and reprioritized HUD by appointing the country's leading urban government housing practitioner as its secretary,” says John Zeiler, CEO of New York City-based Hudson Housing Capital.

Insiders from all sides of the affordable housing industry say Donovan has the experience to navigate the many layers of U.S. housing policy at a critical time as foreclosures mount, public housing authorities struggle to balance their budgets, and affordable housing production falls.

“We are confident in the extraordinary expertise, experience, and skills he has exhibited in both public- and private- sector positions,” says Conrad Egan, president and CEO of the National Housing Conference.

Donovan's stature in the industry will also help the agency to heal from recent scandals over the awarding of contracts, which in 2008 forced the resignation of then-HUD Secretary Alphonso Jackson.

“I think Donovan's going to bring credibility back to the department— something it was lacking throughout much of the Bush administration,” says Timothy Kaiser, executive director of the Public Housing Authorities Directors Association (PHADA).

Donovan's most recent experience is as commissioner of New York City's Department of Housing Preservation and Development (HPD), where he led the city's massive 10-year plan to build and preserve 165,000 units of affordable housing.

He also managed New York City's annual competition among housing developers for federal low-income housing tax credits (LIHTCs). Run by state and local officials, the tax credit program is the largest remaining federal program to produce affordable housing.

“That deep knowledge is going to make a tremendous difference,” says Ronne Thielen, managing director of Centerline Capital Group, one of the nation's largest tax credit syndicators. In the recent past, HUD has sometimes adopted policies, such as its 2530 process [an extensive background check of investors in affordable housing properties], that have inadvertently made it difficult to use LIHTCs and HUD financing programs together.

At HPD, Donovan also has harnessed the force of the private housing market to create affordable housing with what he has described as one of the strongest inclusionary zoning ordinances in the country, offering luxury housing developers the ability to build more housing on their sites in exchange for including affordable units in their developments.

Donovan's breadth of experience gives him a full Rolodex of contacts to pull from as he staffs HUD, which is about half as large as it was 15 years ago. “[This experience] will enable him to move quickly and decisively to position HUD with much-needed capacity and expertise,” says Renee Lewis Glover, president and CEO of the Atlanta Housing Authority.

Donovan, 43, also has considerable experience with the older generation of HUD-managed affordable housing.

Prior to joining the Bloomberg administration in 2004, Donovan worked at Prudential Mortgage Capital Co. as managing director of its Federal Housing Administration lending and affordable housing investments.

He also served as HUD's deputy assistant secretary for multifamily housing during the Clinton administration, where he pioneered new tools for preserving and improving more than 2 million affordable apartments, proving his commitment to preserving and revitalizing existing affordable homes, according to Michael Bodaken, president of the National Housing Trust.

At HUD, Donovan gained a reputation as a flexible thinker who encouraged sometimes intractable staff ers to solve problems. “He inspires people to look for solutions—as opposed to saying, ”˜Oh, that's just the way it is,'” says Sheila Crowley, president of the National Low Income Housing Coalition.

“He is a policy wonk who has political skills. He is also a very nice guy,” says Carol Lamberg, executive director of New York City-based aff ordable housing developer and housing advocacy group Settlement Housing Fund, Inc.

Donovan also has academic experience, as a visiting scholar at New York University and a consultant for Congress' Millennial Housing Commission.

He received his master's in architecture and public administration from Harvard University in 1995.

“Trained as an architect, Shaun understands housing down to how homes are designed, built, and wired,” Obama said during his announcement of Donovan's appointment.

Donovan's breadth of experience may serve him well as he works to implement the bold agenda hinted at by Obama during the announcement.

“We need to understand that the old ways of looking at our cities just won't do,” said Obama, explaining his pick. “That means promoting cities as the backbone of regional growth by not only solving the problems in our cities, but seizing the opportunities in our growing suburbs, exurbs, and metropolitan areas.”

HUD is likely to play some role in these regional plans, though it will be interesting to see how much authority local governments will be willing to surrender to Washington.

“Let's leave metropolitan area planning and strategies up to the regional participants,” advises NHC's Egan.

HUD's 2009 agenda is also likely to include preserving and improving its portfolio of existing aff ordable housing. In December meetings with PHADA members, transition officials expressed a “serious interest” in both preserving this inventory and finding incentives to make HUD's portfolio more energy efficient, says PHADA's Kaiser. The $5 billion package of work proposed by PHADA could create new jobs and pay for itself relatively quickly in utility cost savings.

Though no one expects a flood of new funding for HUD, Obama has promised some additional resources. “I know that the department needs resources to successfully implement the expansion of programs required by the Housing and Economic Recovery Act of 2008,” Obama said. “I pledge to work with Congress to secure resources necessary to meet HUD's important mission.”

Biography: Shaun Donovan

Ӣ Born: Jan. 24, 1966

Experience:

Ӣ Commissioner of the New York City Department of Housing Preservation and Development since March 2004.

”¢ Managing director of Federal Housing Administration lending and affordable housing investments at Prudential Mortgage Capital Co. (July 2002–March 2004).

”¢ Visiting scholar at New York University, where he researched and wrote about the preservation of federally assisted housing (June 2001–July 2002).

”¢ Consultant to the Millennial Housing Commission on strategies for increasing the production of multifamily housing (June 2001–July 2002).

”¢ Deputy assistant secretary for multifamily housing at the Department of Housing and Urban Development (HUD), where he ran housing subsidy programs that provided more than $9 billion annually to 1.7 million families and oversaw a portfolio of 30,000 multifamily properties with more than 2 million units (March 2000–March 2001).

Education:

Ӣ Bachelor of arts in engineering, Harvard University, 1987. Master of arts in architecture and master of public administration, Harvard University, 1995.

Family:

Wife, Liza Gilbert; two sons.

Increasing Need

Those who have worked closely with Shaun Donovan say they think he'll do a great job as secretary of the Department of Housing and Urban Development.

"His brilliance and charisma were very obvious," says Bernie Carr, executive director of the New York State Association for Affordable Housing.

Donovan made time to speak with local developers as commissioner of the New York City Department of Housing Preservation and Development. “He met with us from day one to know what the issues were, the challenges, the new opportunities,” says Carr.

Donovan also has had a finger on the housing market's pulse.

“He was talking about foreclosures before anyone,” says Carr.

"Shaun is unflappable," says John Zeiler, CEO of New York City-based Hudson Housing Capital, who witnessed Donovan in action helping to lead a community meeting where warehouse owners and luxury condo developers squared off against residents and affordable housing advocates regarding the city's massive re-zoning of parts of the Brooklyn waterfront from industrial to high-density residential.

"He's passionate about affordable housing," says Shekar Narasimhan, head of McLean, Va.-based real estate dealmaker Beekman Advisors and former managing director at Prudential Mortgage Capital.

Narasimhan remembers a phone conversation in which Donovan launched into a description of a small 80-unit deal that had just closed. At the time, Donovan was HUD's deputy assistant secretary for multifamily housing.

“I said, ”˜Shaun, you're on vacation. Why are you calling? You should be relaxing,'” says Narasimhan. “He said, ”˜I just want to pass on that we helped 80 families. When you have good news, you pass it on.'”

HUD's Challenges

Shaun Donovan will face a long list of challenges if he is confirmed as secretary of the Department of Housing and Urban Development (HUD). Here are AFFORDABLE HOUSING FINANCE's Top 6 picks: