Senate Banking Committee members yesterday praised Shaun Donovan, President-elect Barack Obama's nominee to head the Department of Housing and Urban Development, saying they expect that he will reinvigorate HUD, which has languished under the Bush administration.
"I would say to my colleagues that Mr. Donovan is the most experienced nominee for HUD secretary that this committee has considered in my long experience," said committee chairman Christopher Dodd, D-Conn.
Donovan, 42, has a great deal of experience with public finance, having served as chairman of the New York City Housing Development Corp. and commissioner of the city's Department of Housing Preservation and Development until last fall when he left to work on the Obama campaign.
He was in charge of implementing New York City Mayor Michael Bloomberg's $7.5 billion new housing marketplace plan to build or preserve 165,000 units for low- and moderate-income families, which could provide housing for up to 500,000 residents by 2013.
"You will be one of the most significant figures in our overall financial economy," agreed Sen. Jack Reed, D- R.I.
Donovan even drew praise from Sen. Mel Martinez, R-Fla., President Bush's first HUD secretary until 2003, who said, "You are unusually qualified for the job."
The lawmakers indicated they would recommend the Senate confirm Donovan, and Dodd said he would schedule a committee vote as early as tomorrow.
Housing advocates also are hopeful that Donovan will reinvigorate the department, which they say lost its focus on helping communities with affordable housing initiatives in favor of home ownership under the Bush administration.
During the past eight years, the Bush administration tried to severely cut funding for, or kill, several HUD programs that provide funds used in conjunction with bonds, claiming the programs are inefficient.
The administration has tried to downsize the community development block grant program, which provides grants to state and local governments to fund economic development projects financed by muni bonds.
It also tried to abolish the HOPE VI program, which provides grants to public housing authorities to demolish severely distressed public housing units and replace them with mixed-use, mixed-income developments. The grants are often used as leverage for projects that are financed with tax-exempt bonds.
Housing groups are pushing for more funding for those programs. The National Association of Local Housing Finance Agencies and other state and local government groups have been urging Obama's housing transition team to increase funding for CDBG, among other HUD programs. NALHFA is seeking at least $10 billion in emergency CDBG funding as part of the expected stimulus package.
NALHFA executive director John Murphy and other housing group officials said Donovan will be a boon to affordable housing issues.
"I think he'll do his best to ensure that HUD's mission, and particularly its ability to be relevant in the mortgage crisis, so I think we will see proposals coming out of this administration to focus even more closely to prevent people from going into foreclosure," Murphy said.
During the hearing, Donovan told committee members that mitigating the foreclosure crisis, possibly through tapping the Troubled Asset Relief Program, will be his top priority if confirmed as HUD secretary.
"Housing is at the root of the market crisis we are now experiencing, and HUD must be part of the solution," he said. "If I am confirmed, I look forward to working with the committee as it examines how to proceed, not only in my capacity as HUD secretary, but in my oversight roles with regard to the TARP and the government-sponsored enterprises." He did not specifically tell the committee how he and the Obama administration will address the rising number of foreclosures.
"What I would tell you is that we are looking very carefully at the proposals that yourself, that [House Financial Services Committee] chairman [Barney] Frank and others are discussing around that," Donovan said, referring to the lawmakers' proposals for using some of $350 billion allocation of TARP funds.
