[Senate Hearing 107-244]
[From the U.S. Government Publishing Office]
S. Hrg. 107-244
NOMINATION OF MEL MARTINEZ
=======================================================================
HEARING
before the
COMMITTEE ON
BANKING,HOUSING,AND URBAN AFFAIRS
UNITED STATES SENATE
ONE HUNDRED SEVENTH CONGRESS
FIRST SESSION
ON
NOMINATION OF MEL MARTINEZ, OF FLORIDA, TO BE SECRETARY
U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
__________
JANUARY 17, 2001
__________
Printed for the use of the Committee on Banking, Housing, and Urban
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_______
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COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS
PAUL S. SARBANES, Maryland, Chairman
CHRISTOPHER J. DODD, Connecticut PHIL GRAMM, Texas
JOHN F. KERRY, Massachusetts RICHARD C. SHELBY, Alabama
TIM JOHNSON, South Dakota ROBERT F. BENNETT, Utah
JACK REED, Rhode Island WAYNE ALLARD, Colorado
CHARLES E. SCHUMER, New York MICHAEL B. ENZI, Wyoming
EVAN BAYH, Indiana CHUCK HAGEL, Nebraska
JOHN EDWARDS, North Carolina RICK SANTORUM, Pennsylvania
ZELL MILLER, Georgia JIM BUNNING, Kentucky
MIKE CRAPO, Idaho
DON NICKLES, Oklahoma
Steven B. Harris, Staff Director and Chief Counsel
Wayne A. Abernathy, Republican Staff Director
Jonathan Miller, Professional Staff
Jennifer Fogel-Bublick, Counsel
Brian J. Gross, Republican Deputy Staff Director and Counsel
Melody H. Fennel, Republican Professional Staff Member
Joseph R. Kolinski, Chief Clerk and Computer Systems Administrator
George E. Whittle, Editor
(ii)
C O N T E N T S
----------
WEDNESDAY, JANUARY 17, 2001
Page
Opening statement of Chairman Sarbanes........................... 1
Prepared statement........................................... 43
Opening statements, comments, or prepared statements of:
Senator Gramm................................................ 2
Prepared statement....................................... 43
Senator Dodd................................................. 8
Senator Allard............................................... 11
Senator Reed................................................. 13
Senator Enzi................................................. 15
Prepared statement....................................... 44
Senator Bayh................................................. 16
Senator Miller............................................... 18
Prepared statement....................................... 45
Senator Stabenow............................................. 18
Senator Corzine.............................................. 19
Prepared statement....................................... 45
Senator Schumer.............................................. 46
Senator Bunning.............................................. 46
Senator Ensign............................................... 47
Senator Carper............................................... 34
WITNESSES
Bob Graham, A U.S. Senator from the State of Florida............. 2
Bill Nelson, A U.S. Senator from the State of Florida............ 4
NOMINEE
Mel Martinez, of Florida, Secretary-Designate, U.S. Department of
Housing and Urban Development.................................. 20
Prepared statement........................................... 47
Biographical sketch of nominee............................... 50
Response to written questions of:
Senator Sarbanes......................................... 58
Senator Dodd............................................. 61
Senator Bennett.......................................... 62
Senator Shelby........................................... 63
Senator Reed............................................. 65
Senator Stabenow......................................... 68
Senator Corzine.......................................... 69
Senator Crapo............................................ 71
Additional Material Supplied for the Record
Letter from Senator Connie Mack to Senator Paul Sarbanes
supporting Mel Martinez to be Secretary of Housing and Urban
Development.................................................... 74
Letters from various institutions supporting Mel Martinez to be
Secretary of the U.S. Department of Housing and Urban
Development.................................................... 75
(iii)
NOMINATION OF MEL MARTINEZ
OF FLORIDA TO BE THE SECRETARY OF
HOUSING AND URBAN DEVELOPMENT
----------
WEDNESDAY, JANUARY 17, 2001
U.S. Senate,
Committee on Banking, Housing, and Urban Affairs,
Washington, D.C.
The Committee met at 10 a.m., in room SD-538 of the Dirksen
Senate Office Building, Senator Paul Sarbanes, (Chairmen of the
Committee) presiding.
OPENING STATEMENT OF CHAIRMAN PAUL S. SARBANES
Chairman Sarbanes. The hearing on the confirmation of Mel
Martinez as the Secretary of Housing and Urban Development will
come to order.
Mr. Martinez is currently County Chairman of Orange County,
FL, a very significant executive position at the local
government level. I think Orange County has about 850,000
population.
Prior to this, Mr. Martinez had served on the Orlando
County Housing Authority board of directors, including 2 years
as its chair in the mid-1980's, as Vice President of the
Catholic Social Services of the Diocese of Orlando throughout
the 1980's, as President of the Orlando Utilities Commission
from 1994 to 1997, and was a leading lawyer in his community
for the last 25 years or so. He served the community in many
ways as a volunteer member of numerous organizations.
He came to the United States at age 15 as a refugee from
Cuba. So he has a very compelling and inspiring life story and
I hope, Mr. Martinez, you will outline that for us in your
opening statement to the Committee.
In order to accommodate the President-elect, a number of
committees are meeting this morning to consider nominees. There
are a number of such hearings going on in various Senate
Committee hearing rooms. Obviously, a number of Members of this
Committee serve on other committees and may not be able to
attend all of this hearing. And so, people will be coming and
going in the course of the hearing. It doesn't show any lack of
respect for our nominee. I hope he understands that. But to
have other nominees for whom they also have to show some
respect.
Before I move forward to hear the opening statements from
Mr. Martinez's two Senators from Florida, I just briefly want
to welcome to the Committee our new additions.
Senator Zell Miller of Georgia joined the Committee at the
end of the last Congress. He has moved up very fast in terms of
seniority on this Committee. We are delighted that he is with
us and we very much look forward to his service.
We have three additions on the Democratic side to the
Committee--Senator Carper of Delaware, who was on the Banking
Committee in the House when he served in the House, and a
former Governor.
Senator Debbie Stabenow from Michigan, who joins us from
the House side.
And Senator John Corzine of New Jersey, who of course
brings some very valuable experience to the work of this
Committee.
And on the Republican side, we will have added to the
Committee Senator John Ensign of Nevada, who also served in the
House on the Ways and Means Committee.
We very much welcome the new Members. I am sure that they
will enjoy their work on this Committee.
Before turning to Senators Graham and Nelson for their
introductions, and then, once they conclude, we will go to
opening statements by Members of the Committee, I will ask
Senator Gramm if he wants to say anything.
COMMENTS OF SENATOR PHIL GRAMM
Senator Gramm. Well, why don't I, as a courtesy to our two
colleagues, who I know need to be in 15 other places, why don't
I let them go ahead and give their introduction and then I will
give my opening statement, Mr. Chairman.
Chairman Sarbanes. I want to recognize our two colleagues
from Florida to introduce the nominee.
Senator Graham, we will turn to you. And then we will hear
from Senator Nelson.
Bill, that is the way it works. You are the new kid on the
block. You have to go second.
Senator Nelson. Senator Graham has made sure that I
understand that.
[Laughter.]
Senator Gramm. You are going to do all right here, Nelson.
[Laughter.]
STATEMENT OF BOB GRAHAM, A U.S. SENATOR FROM THE STATE OF
FLORIDA
Senator Graham. Mr. Chairman, Members of the Committee, I
appreciate this opportunity to introduce an exceptional human
being and a long-time personal friend, Mel Martinez.
I am confident that Mel Martinez will serve America as well
as he has his home community and will bring great pride to
President-elect Bush for his leadership in the important
Department of Housing and Urban Development.
Mr. Chairman, in your opening remarks, you have already
covered several of the items that I was intending to bring to
the Committee's attention. So I will summarize those issues
that have not been previously covered.
Mr. Chairman, you mentioned that Mel Martinez has a
compelling personal story. It is the story of America. A family
coming to this country, seeking freedom and liberty and the
opportunities.
In this case, it was a divided family, because like many
others in Cuba, in the early 1960's, the parents were unable to
leave.
And so, through the good work of the Catholic Church and
the U.S. Department of State, arrangements were made for the
children to leave.
This was known as Operation Peter Pan, a fitting name
because these children's parents were, indeed, sending their
sons and daughters off to a kind of never-never land which they
hoped would fulfill the promise of a better life. For Mel
Martinez, it certainly has. After he finished high school in
Orlando, he went to college and finally graduated from Florida
State University College of Law in 1973.
For 25 years, Mel and his wife Kitty have raised a family
with three beautiful children. Mel has practiced law and they
have been actively involved in the Orlando community.
After a number of civic activities, in 1998, Mel offered
himself for the position of Chairman of Orange County, FL. That
position, Mr. Chairman, is essentially the chief executive
officer of a county which has in excess of 800,000 people, with
all of the challenges that come with a rapidly developing urban
area.
Mr. Martinez has been responsible since his election to
that position for providing the residents with government
services, including public safety, neighborhood development,
social services, and public works. Under his leadership, Orange
County has begun addressing problems such as overcrowded
schools, funding for after-school programs for children in
partnership with the YMCA and the Boys and Girls Clubs.
He has worked with the private sector to create new health
care clinics and services for senior citizens. He has held
leadership positions in other agencies and organizations. He is
now the Chairman of Governor Jeb Bush's commission on managing
our State's rapid growth.
Mel has presided over the Orlando Utilities Commission, the
Greater Orlando Aviation Authority, and perhaps most relevant
for today, the Orlando Housing Authority.
In that position, one of the things that Mel has done is to
show a deep sensitivity to all of the components of the housing
authority, especially the residents themselves.
Out of Mel's personal experience, he has developed a strong
empathy with those who are striving to achieve, and that has
been
reflected in the manner in which he has carried out his
responsibilities at the Orlando Housing Authority. I am
confident it will characterize his service as Secretary of the
Department of Housing and Urban Development.
Mr. Chairman, I wish to congratulate Mr. Martinez for his
nomination. This is an opportunity to use the experience which
he has gained to help many more of our most vulnerable and
least advantaged citizens.
I strongly urge his confirmation before this Committee and
hope that, expeditiously, Mr. Martinez will be moved into full
service as Secretary of the Department of Housing and Urban
Development.
Thank you.
Chairman Sarbanes. Thank you very much, Senator Graham.
Senator Nelson.
STATEMENT OF BILL NELSON, A U.S. SENATOR FROM THE STATE OF
FLORIDA
Senator Nelson. It is a privilege for me to be here for my
friend, Mel. And also to call the attention to the Chair that a
letter was sent and would be part of the record from Senator
Connie Mack on behalf of Mel.
It is such a privilege for me to be here on behalf of a
personal friend whom I have known for going on 3 decades as a
wonderful family man, as a consummate professional, and as a
community-involved citizen before he ever offered himself for
public service.
Indeed, one example of that is when I ran for Congress and
joined Senator Graham in the class of 1978, Mel Martinez----
Chairman Sarbanes. A very auspicious class, that class.
Senator Nelson. An auspicious class.
[Laughter.]
Senator Gramm. An old class.
[Laughter.]
Senator Nelson. Mel Martinez and his wife Kitty went door-
to-door for me in the Nelson's Neighbors campaign. That is just
one example of him lending a hand to help in his community.
Another good example is, without any fanfare as the Chairman of
Orange County, the position to which Senator Graham has already
referred, the chief executive position of a major metropolitan
county.
Just before Christmas, my wife and I had a food
distribution to the poor and to the hungry in Orlando. And who
was out there in the line scooping up beans and bagging them,
along with a number of community leaders, both in the private
sector and public sector, but Mel and Kitty. I think that
indicates a heart for public service. And whenever we find that
in a person, that is worth rewarding.
I think it is going to be a great reward for America, that
one of ours from the Sunshine State, we are sending to
Washington to be in a very important position for this Nation.
Thank you, Mr. Chairman.
Chairman Sarbanes. Gentlemen, thank you both very much.
I know you have competing demands on your time and we
certainly are pleased to excuse you. But thank you very much
for appearing to introduce the nominee.
Senator Graham. Thank you very much, Mr. Chairman.
Chairman Sarbanes. I am pleased to be able to hold this
hearing on the confirmation of Mr. Martinez.
I met with Mr. Martinez in my office last week and found
him to be serious, thoughtful, and committed to the enterprise
he is about to undertake.
I was much encouraged by the statement he made when first
nominated, when he said, ``I will work hard to ensure that
every American has every opportunity to have affordable
housing.'' And I look forward to working with you to achieve
this important goal.
I want to take just a moment or two this morning to review
the progress HUD has made in recent years, as well as to set
out some of the challenges which I think Mr. Martinez will be
facing at the department.
HUD has had a history of being a troubled agency. While
many of its programs do a good job of providing decent homes to
millions of poor and working families, it has proven to be over
the years a difficult department to manage.
In fact, in 1994, HUD was put on the General Accounting
Office's--the GAO--High Risk List, the only agency to be so
listed.
However, as a result of concentrated efforts by Secretary
Cuomo and his top staff, I understand that the GAO will
announce this afternoon that HUD is now off the high-risk list.
This result was achieved by some tireless work to correct
the problems in financial oversight, procurement systems and so
forth, and I think Secretary Cuomo has really tried to address
the managerial issues within his department. And I am pleased
that just before he departs, the GAO has reached the judgment
that they made significant progress, sufficient to take the
department off the high-risk list. This is by no means to say
that all of HUD's problems have been solved. I do not want the
nominee to start relaxing too much in terms of what he is
taking over.
But it does mean that Mr. Martinez will take over a
department with a management system in place that is moving HUD
in the right direction.
I believe his primary job will be to sustain this progress
and continue to move forward on this important management
issue. Let me also emphasize a couple of the reforms which have
taken place at HUD which I think are important.
First, they have undertaken the physical inspection of
public and assisted housing. And I very much hope that this
will be kept in place. I think it gives HUD a good way to get a
handle on its inventory, to avoid or to move quickly to deal
with the deterioration of properties and to avoid a descending
situation, a downward spiral in terms of managing their
inventory.
Second, the Federal Housing Administration, the FHA, has
played an important role in helping us reach historically high
levels of homeownership, including record levels among Black
and Hispanic families.
FHA has offered millions of Americans the opportunity to
take part in the American dream of homeownership. In order to
keep this dream alive, I think we need to continue HUD's
efforts to identify and sanction lenders who consistently make
bad loans and the appraisers who misstate the values of these
homes engaged in these really deplorable practices.
In the last Congress, I introduced legislation to codify
this program, which is called Credit Watch, and I hope we can
review that legislation this year as we move forward.
Third, we need to continue the work HUD has only just
started, working with the Treasury Department to fight
predatory lending by enforcing fair housing laws and other
statutes, by working with the Congress to develop new tools to
fight these abusive practices.
To sustain the progress in management noted by the GAO, Mr.
Martinez obviously will have to hire capable assistant
secretaries and other staff with demonstrated competence in
their fields.
I understand from our conversation that the incoming
Administration has given him the authority and the room with
which to do this in terms of the flexibility to hire qualified
staff, and obviously, that is very important. Many of those
people will appear before this Committee for confirmation. We
wish you well in that endeavor.
I want to conclude by noting that one of Secretary Cuomo's
significant accomplishments was the success he had in making
housing an important issue within the Clinton Administration, a
success reflected in recent years by the increase in budget
resources for HUD to carry out its programs.
Mr. Martinez will face the challenge to convince his
colleagues at OMB--that omnipresence--which you will soon come
to fully appreciate--to convince his colleagues at OMB of the
importance of sustaining these budget improvements.
Much of what we seek to accomplish, whether it is better
education, more effective job training, getting people from
welfare to work or other efforts to empower people, rests upon
people having an affordable place to live in a safe and stable
neighborhood. We wish you well in that very important endeavor.
We have received a number of letters in support of the
nominee. And I ask unanimous consent that they be placed in the
record. Without objection, so ordered.
Very quickly, from the Appraisal Institute, the Council of
Large Public Housing Authorities, the National Association of
Housing and Redevelopment Officials, the National Association
of Realtors, the National Affordable Housing Management
Association, the Public Housing Authority's Directors
Association, a very thoughtful letter from a young man now with
the Greater Boston Legal Services who worked with Mr. Martinez
previously in Orlando, Habitat for Humanity, the Consumer
Mortgage Coalition, and the National Association of
Homebuilders.
And in a sense, foremost in my own thinking, from our
former colleague, Senator Connie Mack of Florida. And I will
just quote briefly from his letter.
Senator Mack says, outlining his past experience with you:
I have found him to be an exceptional individual who has the
intelligence, integrity, and compassion to guide this agency
and serve its constituents.
Senator Gramm and I are intent to try to move this
nomination forward as promptly as we can.
In that regard, I ask that members of the Committee, and I
will repeat it later for others who come in, submit any
questions they may have, any written questions they may wish to
submit to Mr. Martinez, to the Committee by the close of
business today, if at all possible.
We would like to get these questions to the nominee. Mr.
Martinez, I hope you are able to respond to these as promptly
as possible, so that we can distribute the answers to the
Members of the Committee as we take your nomination under
consideration.
With that, I will now turn first to Senator Gramm for his
opening remarks, and then we will recognize the other Members
of the Committee who are present with us.
Senator Gramm.
Senator Gramm. Mr. Chairman, first of all, let me thank you
for holding this timely hearing. It would be my goal to try
early next week to have a vote on this nomination if in fact
all of the questions have been answered, obviously, I will
check with Senator
Sarbanes and with Members of the Committee to see if we might
do this as early as Monday afternoon. But in any case, we will
try to find a time convenient to the majority of the Members of
the Committee.
I would like to thank you, Mr. Chairman, for your input
into our legislative activities in the last Congress. I think
some in the media coverage of events suggested that we were
somehow in partisan conflict. But the reality is that we had a
very active legislative agenda last year. We passed perhaps the
most important banking bill in 60 years. And on final passage
we had virtually a unanimous vote--with only a very small
number of people in opposition. And every major action we took
in the end was a bipartisan action.
I think the lesson of that--to both of us--is that we need
to make an effort to be more bipartisan to begin with, since we
always end up there anyway.
I want to pledge my commitment to that effort. I want to
say to the new Members of the Committee that I look forward to
working with you. And as Chairman after the 20th, I will be
looking for good ideas, whether they come from Democrats or
Republicans.
I hope to have an opportunity to visit individually with
each of our new Members to talk about their agenda and what
they want to do. And I look forward to working with each of
you.
Mel, I want to welcome you before the Committee. I cannot
think of an agency that would be more difficult to run than
HUD.
On the other hand, I do believe there is a bipartisan
consensus that we want to get the taxpayers' money's worth for
the effort that we have undertaken to provide housing--quality
housing--to provide an environment in which the maximum number
of people can go on and build and buy their own homes and lead
productive lives.
I would like, from my own point of view, simply to ask you
to learn what the agency does, to they to make every program
within its jurisdiction work, whether you agree with them or
not.
And once you have tried to make them work and have learned
whether they really work, then I would urge you to come back to
this Committee and ask us for the legislative changes to
maximize your ability to get your job done.
I think it is fair to say that we are open to changes in
HUD, which has many different programs instituted at many
different times under many different circumstances.
Going through and consolidating and rationalizing, I
believe, would be very productive. So I want to say that I am
excited about your appointment, and you bring a practical
experience at the local level which is very much needed. Your
compelling life story is a clear message to anybody anywhere in
America, that if you work hard, you can succeed in America.
This is a country where, routinely, ordinary people do
extraordinary things. And that is really the American story.
Your life is a clear example of how America works. And
quite frankly, I think it is important that there be people out
front that other people can look up to as role models.
So I want, first, to pledge my support for your nomination.
Second, I look forward to working with you and hope you will
feel free to work with this Committee in partnership to seek
any changes you need to do your job. And Mr. Chairman, thank
you again for holding the hearing.
Chairman Sarbanes. Well, thank you very much.
If I could just take a moment, I want to just follow up on
one thing that Senator Gramm said about the work of the
Committee in the last Congress.
A lot of attention was focused on the Financial Services
Modernization bill. That obviously was an extremely important
piece of legislation. There were some sharp divisions, but, in
the end, we in effect reconciled them and moved that
legislation through.
Aside from that piece of legislation, the other legislation
reported out of this Committee was all done by overwhelming
margins, without any real division--the Export Administration
Act, the manufactured housing legislation, the rural television
legislation.
We had important other housing legislation and the
regulatory relief bill. The Committee was able to work
together, I think in a very constructive and effective fashion.
That is not always, I think, been fully recognized.
And I join the Chairman--well, I am anticipating our 4 days
here--joining Senator Gramm in making that point.
Senator Dodd.
STATEMENT OF SENATOR CHRISTOPHER J. DODD
Senator Dodd. Thank you very much. For the next 72 hours, I
get to call you Mr. Chairman, which is a pleasurable
experience.
I say that with all due respect to the incoming Chairman on
Saturday at noon as well, my good friend, Phil Gramm. And let
me commend both of you for the last Congress' work.
The work of this Committee is complicated work. It is not
work that always attracts the kind of instant analysis that we
see on the nightly news.
It is hard to get people's attention when you start talking
about some of the arcane subjects that involve the jurisdiction
of the Banking Committee. But they play a critical role in the
economic and social well-being of this Nation.
I have been deeply appreciative of the work of both of you
and the other Members of the Committee and look forward to that
same kind of relationship in this Congress.
Let me also join in welcoming the new members to the
Committee, people I have known for some time. I think you are
going to make a wonderful contribution to this Committee and
its work.
Let me also commend, Mr. Martinez, your predecessors. Henry
Cisneros, who I know you know, from Texas, did a remarkable
job at HUD and was largely responsible for beginning the
process that resulted in the news that will be announced either
today or tomorrow, and that is what Senator Sarbanes, the Chairman,
has pointed out, HUD is coming off the agencys at-risk list.
Andrew Cuomo, his successor, has done a terrific job as
well. He worked with all of us up here through some difficult
issues.
I should actually begin with Jack Kemp. I think Jack Kemp
did a very fine job, began a process of really putting HUD back
on track again. So there have been some very fine people who
have taken on these issues and worked hard.
I was intrigued reading The Washington Post this morning--
the story about your involvement back in Orlando when you were
head of the housing agency and how you stood up for low-income
people at a time when issues of shelter were at stake. That
means so much more.
Rhetoric comes kind of easy during the process. Everybody
has nice things to say and that is all well and good. But I am
always impressed with what people have done. That speaks much
louder to me than a lot of rhetorical flourishing about
friendships.
And your activities when issues of housing have been
involved where you have had a leadership role, you have spoken
up for people who do not always have a voice. And I commend you
for that. So I look forward to working with you in this coming
Congress on a number of issues.
Your personal story, as Senators Sarbanes and Gramm have
said, is a very, very compelling one. Senator Gramm said all
who were born in this country, and that is certainly true. But
we have also been enriched by people who haven't been born in
this country, who come to America. It is the great strength of
our country. It is the great diversity and the fact that our
doors are open to people from around the globe.
You are a wonderful example, and your family obviously is,
of tremendous courage and strength and sense of purpose. It is
a pleasure to have you in the public sector and your commitment
to those issues that you have already demonstrated during your
service in Florida.
These hearings obviously provide us a quick opportunity to
kind of hear you talk about some of the things you care about.
But it is also worthwhile for nominees to get a chance very
briefly to hear about the issues that we concern ourselves
with.
You and I had a very good meeting last week and I had a
chance to outline a couple of them. But let me just mention
very briefly a couple of issues again that I am very much
interested in, and based on your background and things you have
said, I believe you are as well.
As I said earlier, HUD has really done some remarkable
things in the last few years. We are seeing homeownership rates
now at the highest levels in the history of this country, in
excess of 67 percent. We have increased homeownership by nine
million people in the last 8 years--truly a remarkable record
and obviously, a reflection of the kind of economic times we
are in. We have also seen record levels of homeownership in
urban centers. African-Americans and Hispanic and Latino
families in this country, which is again, a very positive
indication.
The volume of Federal Housing Administration loans has
doubled in recent years. FHA has now about 6.7 million
mortgages in its portfolio.
FHA has gone from a $2.7 billion deficit to a current value
of more than $16 billion, and that is certainly a wonderful
legacy to inherit as you come in as the new Secretary of HUD.
HUD has also recognized the changing needs of an aging
population by producing the Housing Security Plan for Older
Americans. We have made progress, but a lot is yet to be done.
I just want to mention a couple of areas.
As I mentioned to you the other day, the National Housing
Act was truly a bipartisan effort. Housing issues have
historically been bipartisan issues--decent, affordable shelter
which you have already articulated, has been a common
commitment of most people in public life, with the exception of
a few years where this became a highly divisive issue. I think
we are back to the time again when people care about those
points.
One of the areas of paradox in all of this, of our recent
prosperity, is that a lot of low-income people in this country
have not all enjoyed this remarkable increase in wealth in our
country.
And for an awful lot of people, safe and affordable housing
is more elusive than ever in this Nation. And that is because
the cost of housing has outpaced the increase in wages in many
of our urban centers.
My State is a good example of that. It is always listed as
the most affluent State in America on a per-capita income
basis. And yet, the cities of Bridgeport, Hartford, New Haven,
the smaller cities, were also listed as some of the poorest
cities in America.
Here is a State the size of San Diego County that has some
of the greatest wealth in the country, and some of the most
serious poverty right next door to each other.
It is a difficult issue because that wealth in effect
contributes to some of the difficulty that low-income people
have in being able to afford decent shelter.
Public housing is a particular concern of mine in this
area. In some parts of the country--the northeast, the
midwest--the age of public housing has necessitated the
demolition of many units that have become too deteriorated to
be rehabilitated.
Federal policy has tried to provide public housing
residents with vouchers, as you know. But, frankly, there are
not enough of those vouchers to go around.
And further, in high-cost housing markets, vouchers have
not always been useful to low-income families because they
cannot find landlords who are willing to accept the vouchers.
And even with vouchers, they may find the rent to be out of
their reach. So it is a complex issue. I know you are sensitive
to it. And I look forward to working with you on it. So we need
more vouchers. We also need to invest in capital maintenance,
rehabilitation, and funding to ensure that public housing units
remain habitable.
There are a lot of creative programs around the country
that are already underway that I think will be worthwhile
taking a look at.
Finally, in this context, and there are many other issues,
but assisted housing--again, you and I talked about this. I
think this will be one of the great issues in the next 25 or 30
years that we have to deal with. And that is, how we provide
decent, affordable shelter for people who may need something as
little as someone to visit them once a week, to people who need
24-hour care.
And obviously, from Florida, you are probably more
sensitive to this than others because the population of older
Americans, the concentration of older Americans that have lived
in your State or moved to your State.
And yet, I think it is one of the really serious issues
that we are going to face. And the earlier we begin to address
it, I think the better off we will all be.
I mention to you as well that, once things settle down a
little bit for you, we want to invite you to come up to the
cold north. I know the temptation to go back down to Florida, I
do not blame you during this time of year. But we would like to
invite you to come up and see and visit some of these areas. As
I say, you have already expressed an interest in working on, to
get a first-hand knowledge of this.
I have mentioned already to a few of my mayors over this
past weekend that I was very impressed with our conversation,
impressed with, as I say, your personal history, but also your
commitment as a public official in Florida to the issues that
are certainly at the center of the job of Secretary of Housing
and Urban Development. And they are truly excited about the
prospect of you coming up and getting to know them and getting
to know some of the problems we face in Connecticut and
throughout the Northeast and Midwest.
And with that, I look forward to strongly supporting your
nomination, Mel, and I hope you will feel free to call on us,
to be involved with us, to engage the Committee, the staff, its
members.
I have always found, historically, that secretaries who do
that avoid an awful lot of problems if they maintain those
strong open lines of communication.
And certainly, you have given us every indication based on
your previous public experience that that is the way you like
to work, and I look forward to having that partnership with
you, welcome to the Committee, and I look forward to hearing
your statement.
Mr. Martinez. Thank you.
Chairman Sarbanes. As you plan your trip to Connecticut,
don't forget Maryland and Texas in your thinking.
[Laughter.]
Senator Allard. He may want to take a ski trip to Colorado,
too, Mr. Chairman.
Mr. Martinez. Yes, that is right.
[Laughter.]
Chairman Sarbanes. All of us.
Senator Dodd. Every Member of this Committee wants you in
their State.
[Laughter.]
Mr. Martinez. There are some nodding heads back here on
that one.
[Laughter.]
Senator Dodd. I think Colorado's going to win out on this
one.
[Laughter.]
Chairman Sarbanes. Thank you Senator Dodd.
Senator Allard.
STATEMENT OF SENATOR WAYNE ALLARD
Senator Allard. Mr. Chairman, I would like to join you and
other Members of the Committee in welcoming Secretary-designate
Mel Martinez to the Banking Committee, and I look forward to
hearing his statement and listening to him respond to questions
from members of the Committee.
During the last 2 years, I have served as Chairman of the
Subcommittee on Housing and Transportation. And during this
time, chaired over a dozen hearings on various programs at the
Department of Housing and Urban Development.
I know that HUD has tremendous responsibilities and
tremendous challenges.
The job of HUD Secretary is going to be difficult. I agree
with Senator Gramm in that regard. But I am convinced that you
are the man for the job.
As Chairman of Orange County, Mr. Chairman, Mel Martinez
has managed a government of 6,000 employees and a large budget.
Mel has also been chair of the Orlando Housing Authority
and president of the Orlando Utilities Commission.
And during the past year, he has served as chair of the
Florida Growth Commission, where he tackled many issues dealing
with growth and affordable housing.
In my view, the past experiences of Mel Martinez prepare
him for the management challenges at HUD. And as we all know,
HUD is a difficult agency to run. There has been progress in
tackling, I believe, many of the problems at HUD. But much more
remains to be done.
I would urge you, Mr. Secretary, to work closely with the
Congress and Members of this Committee, the General Accounting
Office, and the Inspector General and housing organizations as
we continue to look at ways at how we can improve HUD. We all
have a common goal and that is to see that HUD is run well.
This is in the interest of taxpayers, as well as the
beneficiaries of the programs. It will help us to maximize
HUD's resources as we work to provide assistance for affordable
housing.
As you get settled into your new position, I recommend that
you consider the consolidation of some of HUD's more than 300
programs. I think we should consider shifting some of those
programs to State and local governments. In my view, previous
examples of this have been successful. The best thing that can
be done is to focus on the core mission of HUD, which is
affordable housing.
Last year, as was pointed out by some of my colleagues,
Congress was able to pass a significant homeownership bill. I
look forward to working with the new Secretary as HUD writes
regulations and implements the new law.
In particular, I want to call attention to the manufactured
housing portions of the legislation. These provisions
streamline safety and construction standards for manufactured
housing.
This legislation will help to alleviate the shortage of
affordable housing and I look forward to working with you as
HUD implements the changes that are necessary. Another portion
of that legislation dealt with the issue of regulatory barriers
to affordable housing. This is an area that is of great
interest to me.
In my view, government at all levels--Federal, State and
local--should be very cautious when adding new regulations,
fees and red tape that increase the cost of housing.
Several other issues are very important, such as the health
of the FHA fund. I have asked the GAO to study the health of
the fund under difficult economic scenarios.
They are conducting what is best described as an economic
stress test. Their report will be released in February and I
look forward to working with you as we review legislative and
administrative options for the FHA fund. If we find that there
is a surplus, my preference is to lower borrowing costs by
rebating excess premiums to homeowners.
Last year, significant concerns were raised concerning the
expenditure of funds and living conditions in parts of the
Puerto Rico housing agency. By the way, this is the second
largest, housing authority after New York City.
This was a big issue in the recent governor's election in
Puerto Rico. The governor ran on a platform that included
reform of the housing authority.
HUD has begun to respond to these concerns and I want to
work with you to improve conditions in Puerto Rico and other
housing authorities where living conditions are unacceptable.
Finally, I hope to work with you to modernize some of the
regulations at HUD. In particular, simplifying the disclosure
requirements under the Real Estate Settlement Procedures Act,
otherwise known as RESPA.
We need to modernize and clarify these regulations. This is
important as we work to provide the most relevant and useful
information to homebuyers.
The current paperwork can be confusing and we may be able
to find ways to provide more precise education to consumers in
order to protect against improper practices.
Mr. Chairman, let me conclude by stating my support for
Secretary-designate Martinez. I have sat down and had an
opportunity to visit with him. I believe he is an excellent
choice for HUD Secretary. I hope that he will receive the
unanimous support of this Committee.
I would also urge that we do whatever is necessary to see
that he is confirmed and in place as soon as possible,
hopefully on Inauguration Day. And Mel, I look forward to
working with you in the 107th Congress.
Mr. Martinez. Thank you.
Chairman Sarbanes. Thank you very much, Senator Allard.
Senator Reed.
STATEMENT OF SENATOR JACK REED
Senator Reed. Thank you very much, Mr. Chairman.
I would like to commend and thank you and Senator Gramm for
scheduling this hearing. I also welcome the new Members to this
Committee and certainly welcome Mr. Martinez.
Mel, it was a pleasure to meet with you last week. Your
personal characteristics are obvious and outstanding. And you
bring to this job interesting perspectives as head of a large
county in Florida, and as a former Chairman of a public housing
authority. I am eager to hear your views on housing policy.
Our Nation has come a long way since the Housing Act of
1949, where we committed this Nation to a goal of a decent home
and a suitable living environment for every American.
Today, we might amend that phrase by also including a safe
and affordable home for every American. And we have made
tremendous progress.
We have increased homeownership. We have improved the
quality of housing stock. We have developed a strong tax and
financing system to support housing in this country. And we
have a strong and stable economy that undergirds our housing
policies.
But despite this progress, a number of people have been
left behind and serious challenges remain in ensuring that all
Americans have safe and decent and affordable housing.
In fact, there are increasing numbers of families
throughout this country who do not have access to such housing
and we have a situation in which the number of households with
significant housing needs remains at an all-time high.
In a report to Congress issued by HUD in March of 2000, HUD
noted that despite continued economic expansion, worst-case
housing needs have reached an all-time high of 5.4 million
families. And in the same report, we learned that housing that
is affordable to the lowest-income Americans continues to
shrink.
In fact, the number of rental units affordable to extremely
low-income families decreased by 5 percent since 1991, a loss
of over 370,000 units.
The report also noted that worst-case housing needs have
increased dramatically, particularly in minority households,
during the 1990's. All of this is mentioned to emphasize the
importance of the job that you will take on in the next few
weeks. These are issues that I have long cared about, coming
from Rhode Island, where we are basically a city-State, and the
decisions made by HUD impact every facet of our lives in Rhode
Island.
If you are approved as Secretary of HUD, you will play a
very important part in helping develop our Nation's housing
policy and our Nation's urban policy. And I believe, working
together, we truly have an opportunity to make a difference in
the lives of the families of this country. If we work carefully
and cooperatively, we can make a difference and I believe we
will make a difference. I would also like to urge you to
maintain the recent management successes of HUD.
As the Chairman has noted, and others have noted, the GAO
is reversing their determination that HUD is a high-risk
agency. That is good news. But there are still significant
challenges and great tasks ahead in terms of making sure that
we have an efficient and humane Department of Housing and Urban
Development.
I know and I hope that you will continue the progress that
we have made in managing HUD. I also hope that you continue to
stimulate the creation of more affordable housing.
Again, back in my own State of Rhode Island, it has been
estimated that 46 percent of renters are unable to afford a
two-bedroom apartment at the current fair market rent. And that
is a staggering statistic.
Part of it is working together to ensure that HUD has the
funding necessary to carry out its mandate of providing safe
and decent housing for all Americans. And I know and hope that
you will carry out this mandate.
Finally, I would be remiss without mentioning one of my top
priorities. I had a chance to chat with you about this in my
office.
Lead poisoning is one of the most significant environmental
threats to children in this country because we have housing
stock that is saturated with lead paint. We have to do
something.
This agency has taken upon itself with funding requests and
with regulations to address this problem. And I hope, working
together, we can make progress. And as I look at your own
wonderful family, I suspect you will take this mission on, not
just with your head, but also with your heart. And I thank you
for that.
We have daunting and critical issues ahead. I look forward
to working with you. And finally, just for the record, when you
visit Senator Dodd, you can fly into T.F. Green Airport in
Warwick, RI, which is the gateway to southern New England.
Thank you.
Mr. Martinez. Thank you very much.
[Laughter.]
Chairman Sarbanes. And remember, you do not even have to
use a plane to visit Maryland.
[Laughter.]
Senator Enzi.
STATEMENT OF SENATOR MICHAEL B. ENZI
Senator Enzi. Thank you, Mr. Chairman. I want to thank you
for holding this hearing so promptly so that we can get on with
this important area of American life.
Housing of course is part of the American dream and I am so
pleased that Mr. Martinez has been nominated for this
secretarial position. One of the reasons that I am really
excited about it is because he has local experience.
A lot of times here in Washington, we think on the Federal
level and sometimes we even give States a little bit of credit
for doing something. But the people really live at the local
level. And particularly when it comes to housing.
You bring some experience on the ground with people that
have been going through the turmoil of searching for housing
and hoping for affordable housing.
And when we met, we also talked about the importance of
homeownership. I mentioned that at one time I was mayor of a
boom town. And one of the problems when a town is growing
rapidly is having housing for people. But I got to notice that
when people got to own their own home, their attitudes about
the community changed drastically.
They became more involved, more concerned, more
participating. They actually created a community by having a
little piece of the American dream. And that is what you have:
the opportunity for America.
I guess one of my roles on this Committee, though while it
is called urban, is to bring up the rural aspect that is
covered by it just as well.
Wyoming, of course, is one of those two square States out
there and we are anxious to have you not only slip into
Colorado, but then drift up into Wyoming for a little fishing
and maybe even some hunting.
[Laughter.]
Seeing Yellowstone and Grand Teton National Park on the
way.
[Laughter.]
But while you do that, you will notice how rural we are.
The sides of our State are about 300 miles on a side. Our State
only contains 480,000 people. So we have a lot of wide open
spaces. But we have people who are just as concerned about
homeownership and affordable housing as any place in America.
We also have the Wind River Indian Reservation, which is
the only reservation in the United States that has two tribes
on the same reservation who were formerly warring tribes. They
have some significant housing needs there that I know that you
will take a look at.
Finally, I would commend you for your experience in
management. We talked a little bit about the Government
Performance and Results Act and the mechanism it has for
continuing the improvement in HUD and making sure that
everybody there understands that you know what a customer is. I
hope that you will help us to find out what the job of HUD is
and how we will know when it is done. And so, I commend you on
your nomination and I would ask that my full statement be in
the record.
Mr. Martinez. Thank you, Senator.
Chairman Sarbanes. Thank you, Senator Enzi.
Senator Bayh.
STATEMENT OF SENATOR EVAN BAYH
Senator Bayh. Thank you, Chairman Sarbanes, for convening
these hearings. It is good to be with you and I thank you for
your leadership.
Chairman-to-be Gramm, it is good to be with you once again.
Mr. Martinez, I want to thank you for your presence here
today and for your patience, your willingness to listen to all
of us once again after having paid so many courtesy calls.
Frankly, I was sitting here wondering how you were going to
do your job, having received so many invitations to visit so
many places. But I am sure you will be able to balance all the
competing demands for your time.
I very much appreciated your coming to see me. And
particularly, I wanted to remark upon your pledge of
bipartisanship, which I thought was particularly appropriate.
Housing and the issues you will be addressing should not
and need not be partisan in any way. It takes all of us working
together, Members on both sides of the aisle, to fully realize
the American dream of quality affordable housing for every
citizen. And I very much appreciated your heartfelt pledge to
operate in that manner.
On behalf of the people on our side of the aisle, I wanted
to extend the hand of friendship and say that we are here to
work with you to accomplish that objective in good faith. And
so, I thought that that was an excellent way for you to begin.
I want to also remark, as most of my colleagues have, on
your compelling personal story. And it is wonderful to see your
family sitting behind you today. I am sure you are bursting
with pride and we will introduce them in a few moments. I want
to thank them. I know you would not be here today without their
support. So it is good of them to be with you.
I hope you will be more than just a caretaker. I suspect
that you will be more than just a caretaker, but an advocate.
Particularly given the history on the part of some in your
party for actually advocating the abolition of the department
you will now be heading.
I think it is up to you to make a compelling case to them
about the vital, important mission of this department. And I
know you will. I would encourage you along those lines because,
as my colleague, Senator Reed, just finished reciting, there is
much unfinished business.
Even at a time of unparalleled prosperity and the highest
incidence of homeownership in the history of America, too many
are still struggling to make ends meet and to realize the
American dream of affordable housing.
With the economy possibly slowing and the business cycle
not yet having been repealed, at least as far as I know, we
will face some downturn sometimes in our economy, which will
add additional stress to those who are struggling to reach that
objective. So your emphasis on affordable housing I think would
be very well placed.
You and I talked briefly about the concept of smart growth.
I encourage you once again in that regard.
We both agreed that this is very much a quality of life
issue for many in our country. And intelligent growth in ways
that help to foster the other values we hold dear I think is
something that you would be well advised to pursue, and I
commend you for having pursued that already.
I have something of a home State interest in this regard,
having had two mayors of our largest city, Mayors Hudnutt and
Goldsmith, having taken up this issue. So I commend you for
your interest in that regard.
Finally, I would say that your building on your compelling
personal story as an immigrant to our country, I know you would
feel a special sensitivity about the need to be on the look-out
and to fight any vestiges of discrimination against anyone for
reasons of race, religion, or other factors.
I know that is an important part of the American dream and
story and one that you would share, given your own personal
background. And I would commend that to you as well. It is
important that we send that signal to all Americans, that
opportunity is available to them and that the vestiges, the
unfortunate vestiges of the past are exactly that--in the past.
Finally, I would just remark upon your courage. There is
one aspect of your personal biography that has not been
remarked upon here. But as a prominent and successful trial
attorney, you may find yourself lonely sometimes in the new
Administration.
[Laughter.]
But I want to commend you for that and can only hope that
they will solicit your views on matters other than housing
policies.
[Laughter.]
Thank you very much, Mr. Martinez. I look forward to
working with you.
Mr. Martinez. Thank you.
Chairman Sarbanes. Thank you, Senator Bayh.
Senator Miller.
STATEMENT OF SENATOR ZELL MILLER
Senator Miller. Mr. Chairman, it is an honor to be a Member
of this Committee and to be a part of this important
confirmation hearing. I am pleased that the work we are
undertaking today pertains to such important issues for our
country--affordable housing and the development of our urban
centers.
As a Senator representing the State of Georgia, these
issues have great impact on areas such as Atlanta and Augusta,
Savannah and Columbus. But they also affect rural populations,
traditionally, the most economically challenged in Georgia.
Housing needs are not just limited to the big cities. For
example, in the suburbs of Georgia, throughout the last decade,
we saw a decline in the number of units affordable to low-
income families. And today, over one third of households facing
worst-case needs are in Georgia's suburbs.
Don't misunderstand me. Economic development initiatives
are still needed greatly in Atlanta and other cities around the
country. We must continue to fight urban poverty and the many
social ills it brings to this Nation.
But I also believe, as the nominee approaches this job,
that you must do so with the outlook of not serving just one
sector of America, but all of America--urban and rural.
Mr. Martinez, I have followed your public career in my
neighboring State. You are an excellent choice for this
position and I look forward to strongly supporting you. And
also, as you well know, you have received all these invitations
from other States. But Atlanta and Georgia is on your way home.
Mr. Martinez. That is right.
[Laughter.]
Thank you.
Senator Miller. Thank you, Mr. Chairman.
Chairman Sarbanes. Thank you, Senator Miller.
Senator Stabenow.
STATEMENT OF SENATOR DEBBIE STABENOW
Senator Stabenow. Good morning. Thank you, Mr. Chairman. It
is a pleasure to be with you and on the Committee. It is an
honor to serve with my colleagues and Ranking Member, soon-to-
be-Chairman, Gramm, I look forward to working with you as well.
I must tell you that I relish my seniority over Senator
Corzine.
[Laughter.]
We have to take what we can as we move. And so, I am
pleased to have some small seniority.
Senator Bayh. I was down there last year, John. There is
hope.
[Laughter.]
Senator Corzine. It is a nice seat. I like it.
[Laughter.]
Senator Stabenow. As we proceed and as everyone has invited
you to their State, I would urge that you start in Michigan and
buy a wonderful new car from our auto industry and drive. And
we would be happy to offer you the opportunity to do that. In
fact, the North American Auto Show is currently going on and I
would love to have you come see all the opportunities.
I share with my colleagues the sense of pleasure at your
nomination and the impressive resume and experience that you
bring.
Obviously, someone who has combined experience and
management skills with advocacy, which is certainly appealing
to me, and I think to all of us. It was a pleasure to have you
in my office and to have the opportunity to talk about issues
of concern to Michigan.
Certainly, there are issues that you will decide every day
that directly affect real people--a senior citizen in Michigan,
a young family wanting to buy a home, to make sure that their
children have shelter, the disabled, the homeless. There are
issues every day that will touch real people in the area that
you will serve. And I think that is very significant.
We have challenges that I am very concerned about, whether
it is Section 8. Whether it is our seniors and the fact that
the population goes up and yet, the funding for housing for our
low-income seniors has gone down in real dollars by 48 percent
in the last 6 years. That is a challenge for all of us to
address together.
The homeless--on any given night, there are 750,000 people
on the streets of our cities and rural communities. Again,
homelessness has gone up. And yet, the resources have gone down
and we have challenges there together.
I agree with my colleagues that it is the great American
dream and that we need to do everything we can to make
homeownership available to every family and every individual.
I would also encourage you to continue support for
enterprise zones. Detroit has very effectively applied their
enterprise zone. And I would be very anxious to have you come
and visit to see what positive impact there has been as a
result of that designation. Also, the enterprise communities.
Flint, an urban area, and Lake County, a rural area, both
having been designated and received opportunities as a result
of that designation. I think it is critical that we work
together in a bipartisan basis. I think by the strong support
on both sides of the aisle in this Committee, you see that you
have the support to work across the aisle to get things done.
I am very pleased to support your nomination. And with your
impressive background, you truly fit the ideals of living the
American dream. And I am very hopeful that, together, we will
be able to give the opportunity to every American to have that
same American dream fulfilled.
Thank you.
Chairman Sarbanes. Thank you, Senator Stabenow.
Senator Corzine.
STATEMENT OF SENATOR JON S. CORZINE
Senator Corzine. Thank you, Chairman Sarbanes.
It is terrific to be here. It is a great honor to be part
of this Committee and serving with you. And I look forward to
serving with Chairman-to-be Gramm and all the Members.
Given my private sector background and interests and, maybe
more importantly, the needs of our State, I really think this
assignment and particularly the area, Designee Martinez, with
regard to housing, is truly going to be a joy of opportunity.
Today's hearing really does deal with one of the most
important jurisdictions of the Committee that is important to
our country and State and for myself.
Like many parts of the country, and I would like to
actually join you on some of these trips, particularly the ski
trip, the trip to the beach and some of the other places, New
Jersey really does suffer from a real shortage of decent,
affordable housing. I think we talked about it yesterday.
The rental costs in New Jersey are the highest in the
country. We also have some of the poorest and most concentrated
senior communities in our country, where affordable public
housing is an important ingredient. We desperately need the
support of this Committee, of your department, and the country.
And I look forward to working cooperatively in a bipartisan
way to address these issues and the mission of the department,
both for my constituents, and for others around the country
that have the same needs.
You and I had a terrific conversation. I think this is a
clear example where people can work in partnership to get
things done. I know your personal experiences will make a real
difference in accomplishing the needs of the Nation.
I think the President-elect made a very, very positive and
great choice in having someone who has the background, the
experience, and the real embracement of the American promise
that your life exhibits.
So I mostly want you to know that I want to work
cooperatively and in detail on the kinds of things that are in
the mission statement, making sure that we service the needs of
our people and provide that affordable housing. And I look
forward to supporting your nomination and look forward to
working very closely with you in the years ahead.
Mr. Martinez. Thank you, Senator.
Chairman Sarbanes. Thank you very much, Senator Corzine.
I want to thank my colleagues for their statements. And
now, Mr. Martinez, I would like to ask you to stand in order to
take the oath before we hear your statement.
Do you swear or affirm that the testimony that you are
about to give is the truth, the whole truth, and nothing but
the truth, so help you God?
Mr. Martinez. I do.
Chairman Sarbanes. Do you agree to appear and testify
before any duly-constituted Committee of the Senate?
Mr. Martinez. I do.
Chairman Sarbanes. Thank you very much.
We are now prepared to hear your statement. And of course,
we very much hope you will, at the appropriate time, present
your family to the Committee as well.
Mr. Martinez. Yes, sir. I will do that.
TESTIMONY OF MEL MARTINEZ
SECRETARY-DESIGNATE OF THE
U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Mr. Martinez. Thank you very much, Chairman Sarbanes, and
Senator Gramm and Members of the Committee.
Thank you very much for allowing this timely hearing to
take place on my confirmation. It is great to be before you
this morning.
First of all, I would like to express my gratitude to
President-elect Bush for the honor that he has bestowed upon me
and the responsibility that he has given me an opportunity to
do on behalf of the people of America.
It is a very humbling experience and it is a great honor,
and I am extremely grateful to him as he has asked me to be the
Secretary of the Department of Housing and Urban Development.
And at this time, Senator, with your indulgence, I would
like to introduce my family. It is with their love and support,
as Senator Bayh stated, that it is possible to carry out the
important public responsibilities that are before me.
First of all, I would like to introduce my wife Kitty. And
my children, Lauren, John and--I guess Andrew had another
hearing to attend.
[Laughter.]
Young Andrew was here and may come back.
[Laughter.]
But anyway, he is the youngest in the family. Also my
brother Ralph, who also has his own compelling story, is here
with us today. And his wife Becky and their children.
Chairman Sarbanes. We are very pleased to have them all
here. We certainly welcome them to the Committee. I just
forewarn them, it is not always this easy, I want you to know.
[Laughter.]
Mr. Martinez. Senator, I have had an opportunity, as has
been mentioned, to live the American dream. I have had an
opportunity to, after arriving here as a youngster at the age
of 15, scared and alone, to enjoy the fruits of what America
has to offer and to be a beneficiary of what this country has
to offer.
And since something has been said about me and what I have
done, what I would like to do in talking about that aspect of
my life is, frankly, talk about the others who have touched my
life and who made all of this really possible for me.
First and foremost is my parents, who had the fortitude to
make that gut-wrenching, difficult decision to send me out of
the country and to love me enough to be away from me at a time
when it was the best thing for me.
Beyond that, there are others who have really touched my
life in different ways. There was a young priest in Miami, now
Monsignor Walsh, who undertook this program called Pedro Pan.
There have been others. Obviously, the social worker, Mr.
Aglio, who touched my life and placed me in foster homes in
Orlando. And obviously, my foster parents.
I have often just marveled at their fortitude and their
strength in simply asking that I be placed or offering their
home to a stranger who did not speak the language and about
whom they really knew next to nothing.
So the fact is that it is those people that are the real
heroes in my life and who have really made a difference and
made it possible for me to be here today. And it is really
about that that I want to tell you about the compassion and
charity of the American people.
We are a good people and I am proud to now have an
opportunity for my life to touch that of others in a way that
mine has been improved and made better by what others did for
me. In my public life, Senators, I have had an opportunity to
fight for inclusion, to fight for opportunity for others.
When I chaired the Orlando Housing Authority, I never
really anticipated that I would have the opportunity to some
day in my life be the Secretary of Housing and Urban
Development. But it came natural to me to try to do for others
what had been done for me--inequality, unfairness, lack of
opportunity, voices that needed to be heard. I sought out an
opportunity to hear them.
We included before it was a Federal mandate the residents
at our meetings of the Orlando Housing Authority, which was an
important thing in order for them to know what was happening in
their lives. We would go in our board meetings to each of the
housing authority complexes and meet in their community room.
This gave them an opportunity to come and hear the work of
the authority, to, frankly, from just being informed, to making
a complaint about a screen door that did not close or a
refrigerator that was not working. And in that, I think that we
were empowering them to better their own lives and to maybe
have a sense of reaching up and doing better in their lives.
I also worked hard to build the senior housing project. The
Orlando Housing Authority has been a well-run authority. And
from that and the savings the authority generated from managing
the Section 8 program, we were able to build a housing project
for elderly and single mothers. These were really positive
achievements and things that I took with a great deal of pride
as we were able to do those. I later moved to public service
and elected office, as Chairman of Orange County.
I have to say that we have faced there a lot of the
challenges that prosperity and growth can bring. Not unlike
Atlanta, Senator Miller, where we have seen sprawling
neighborhoods and suburban neighborhoods. We have seen some of
our central cities perhaps not be as healthy as we would like
for them to be. And we have seen the challenge of affordable
housing be a real significant problem.
So we have tackled the problems of overcrowded schools, of
growth, tried to come up with more innovative ways of growing
as a community, to ensure that the quality of life is
maintained, in spite of the fact that changes are coming and
changes are fast. But I do believe that at the end of the day,
quality of life is what growth management is about, and that is
what we attempted to do.
Housing affordability has been a crisis where I come from.
The affordable housing index for people in our community has
been difficult to attain.
But in any event, those are some of the things that we have
attempted to accomplish and much has been done in the two that
it has been my privilege to serve the people of Orange County
since they elected me to that office. And I have been guided as
I have done that with what I in my heart felt was the right
thing to do, not necessarily the politically expedient thing to
do. And I do believe that those are the things that I will do
if confirmed by the Senate as Secretary of Housing and Urban
Development.
Senators in my jobs, I have been a consumer of HUD. I have
been at the receiving end of HUD programs. I have understood
the local government's frustrations in not being able to access
the bureaucracy and not having clear links of how we do things.
But whether it be in public housing or in the community
development block grants that are so vital to strengthening
local communities, or to the housing block grants, those are
all things that I have touched in my local government role, and
I look forward to now having an opportunity to interact with
our local partners to ensure that things are done in a way that
makes their job more successful.
The population of Orange County has been mentioned to be
about 860,000. I was proud to be elected to that office by the
people of Orange County. But it has then been my responsibility
to manage a staff of over 6,000 people, while at the same time
serving on the airport authority, a large, and I know some of
you who have visited there, beautiful airport which has allowed
Orlando to be one of the real gateways to the world.
We have also worked in challenges of developing our
community in a way that would allow for growth to be compatible
with a quality of life that I can remember when I grew up as a
youngster in Orange County in the early 1960's.
But the challenges of housing and the challenges of all of
these urban problems and obviously, also of some rural and
growth problems are now my responsibility, if you would be good
enough to confirm me.
I do believe that those will be responsibilities that I
will attempt to tackle with a lot of enthusiasm. I, far from
being a caretaker, intend to be a very active secretary,
assuming your confirmation.
Unquestionably, there are problems at HUD. It has been
obvious to me that HUD is a designated high-risk agency.
The news today or tomorrow will be indeed good. But there
is no question but that in addition to the fact that HUD, as an
agency, may not be at high risk, that there are going to be HUD
programs that continue and will continue to be at high risk. So
while much progress has been made, much really remains yet to
be done. And I am very mindful of that.
I believe that my predecessor in office, Mr. Cuomo, and
others before him--Secretary Kemp, Secretary Cisneros--have all
made steady progress. But more must be done. These management
challenges must be met and I intend to meet them head-on.
It would be my greatest joy that at the conclusion of my
term at HUD, that HUD would not be considered a high-risk
agency, not only as an agency, but also in the programs that
HUD administers. The institution must be indeed strong to carry
out the very important mission that HUD has for the American
people.
I believe that unless HUD is a strong agency, that the
mission of HUD cannot be properly and effectively carried out.
So it must have institutional strength. It must have the
fortitude itself in order to credibly carry out the mission.
One of your statements mentioned that in past years, the
discussion about perhaps HUD disappearing. Those questions,
those issues are best answered, Senators, not with rhetoric,
but with action. And I think that the best statement that one
can make about why HUD is an agency that must be supported is
by the way in which HUD conducts its own business and its own
affairs.
I have met with the GAO. I have met with the General
Accounting Office. We have had an opportunity for a very
lengthy briefing. It was very enlightening. I learned a great
deal about their thoughts and their concerns. Certainly, there
are some things about which GAO and also the HUD Inspector
General, have agreed need improvement.
First, the FHA single-family mortgage insurance risk is
something that continues to be of concern.
Second, the impact and continuing evolution of the HUD 20/
20 management reforms.
And third, the failure to integrate financial and
information systems, even after a long period of time trying.
Let me just assure you that each of these three areas, if
confirmed by you, will be areas that will have my highest
priority. We will ensure that we delve into each of these
problem areas to try to find some success, to try to find how
we bring a better resolution to those.
Senators I believe that the core of compassionate
conservatism is to manage the affairs of an agency like HUD in
such a way that we can be there to help those in need. And I
believe that to be my challenge and my task.
I agree that the worst housing need numbers are growing and
the inventory of affordable housing is indeed shrinking. We
have over the last 10 years spent some $10 billion on the
homeless. But still, too many live on the streets.
The elderly housing problem, as has been pointed out by
Senator Dodd, also Senator Graham of Florida spoke to me
passionately about that and I think it is something that we
must address.
I am well aware of those problems that are faced today by
what I call and others have called our greatest generation, the
people who took me in when I got here, the people who made it
possible for a program like Peter Pan to exist, the people who
not only won the cold war, but also set in motion the wonderful
prosperity that we have enjoyed as they reach their senior
years.
We must find a way that we can allow them to afford
reasonable housing in a caring way, that can also give them the
assistance that they would need in their elderly years. And
while we have had record homeownership in recent years, there
are some groups that continue to chronically be left behind.
And it will be my priority to ensure that we find a way for
African-American households and Hispanic households to also
enjoy the fruits of the American dream that I have been so
blessed to be able to enjoy.
President-elect Bush has spoken on some of these issues in
what he has called the new prosperity initiative. His
initiatives are very focused on expanding homeownership.
Congress enacted prior to the conclusion of the last
Congress Section 8 voucher assistance for downpayments. This is
something that I assure you will receive my attention and very
timely implementation. It is a very positive initiative to
assist folks to acquire and have their first home.
The American Dream Downpayment Fund, which will be a $1
billion fund of matching grants, is something that I know the
President-elect is very interested in discussing with the
Congress.
Also, investor-based tax credits and a $1.7 billion fund
over 5 years to encourage construction and rehabilitation in
distressed communities. The need is great across the country,
as is obvious by your various invitations for me to visit your
home States.
I do trust that as we do that, that you will look elsewhere
when we talk about the HUD travel budget, which might be indeed
significant if I am to keep up that schedule.
[Laughter.]
But, in any event, it is important for us to work together.
I think that together with the Congress, much can be done.
Working with this Committee--I look forward to working with you
to tackle all of these difficult issues. There are others who
are our partners in this task as well. There are mayors, our
county executives, and other local officials and governors
around the country. But also a very important group to me, and
I know to the President-elect, which is our faith-based groups
and our not-for-profits.
You know, Senators, when I worked hard to expand our after-
school programs to every middle-school child in Orange County,
we did not do so by explaining the bureaucracy.
What we did is we worked with our not-for-profit sectors.
The Boys and Girls Clubs and the YMCA in Orange County now run
our after-school programs, which are very successful and having
wonderful results. And it is those kinds of partnerships that I
think can really lead to great success in areas like we are
discussing here today.
So I know that together we can and together we will meet
these challenges of housing affordability, housing
availability, and also community renewal, which are the core
mission of HUD.
I do, Senator Gramm, quite agree with you that we have to
mind our knitting, we have to be very tasked on our core
mission so that we can reach that potential that ultimately is
there for us and look at ways that we might be able to combine
programs and to merge those things which it makes sense to do
in a joint sort of effort.
I am in my life a testament to the promise of America and
without question, it is my goal and my passion now to try to
transfer that to those in America who have yet to taste the
wonderful fruits of that prosperity. I can remember with great
pride what my mother and father had as our family purchased
their first home in America, with the help of the FHA which
made that possible. And in fact, I know in my own life, as
Kitty and I have enjoyed living in our home and raised our
family there, what a difference and a transforming experience
it can be for someone to own a home.
I think homeownership is at the root of good citizenship.
And I do not have any question that if we can make more
homeowners out of our American people, that we will be making
better citizens, more committed community builders, as we go
forward to try to meet all of the challenges.
Mr. Chairman, Senator Gramm, Members of the Committee, we
unquestionably have much work to do. The Department of Housing
and Urban Development must continue to evolve into a more
efficient and more effective institution. At the same time, for
low-income families and distressed communities across the
country, the opportunity need is great.
Working as partners, I am confident that we can meet these
challenges and if confirmed by you, I will work in a bipartisan
manner working with Republicans and Democrats to advance our
common goals.
It is my belief that our mission at HUD is not a Republican
or a Democratic mission, but, rather, an American mission. And
with your help, and with the grace of God, I believe that we
can and will succeed.
Thank you, Senators.
Chairman Sarbanes. Thank you, Mr. Martinez, for a very
comprehensive statement. We will now take our rounds of
questions.
I worked closely with Senator Mack, our former colleague
from Florida--former only by a few days--in 1998, on wide-
ranging public housing reform legislation, which was passed
overwhelmingly on a bipartisan basis.
That law, which was supported by public housing authorities
and low-income advocacy groups alike, provides for increased
flexibility at the local level, new opportunities for public
housing authorities to partner with private developments, and
strong commitments to continue to serve extremely low-income
families.
We are very committed to having the implementation of this
law fully carried through. And I would like you to give us your
view on working with the resident groups, the PHA's, and the
Congress in order to accomplish this objective.
Mr. Martinez. Senator, I am delighted to answer that.
I think it is very important to continue that trend. I am a
great believer in partnering at the local level to reach
solutions, and also partnering with the private sector.
In Orlando, as we speak, there is a Hope VI project going
forward which has, of course, private developer partnership and
which has been I think the building of great success.
Again, I believe that it is crucial that as we attempt to
forge these partnerships, that we make HUD a customer-friendly
place and that we allow the PHA's at the local level to somehow
cut through some of the bureaucratic issues that delay some of
these projects or bring their implementation, frankly, not in a
timely fashion.
One of the problems that the Orlando projects has had is
that the cost of money to a developer is a very significant
issue. So working more like business in the business of
government is part of what I think we need to do to make those
programs successful.
But I am very committed to them. I look forward to working
with you and with the other members of the Committee, as well
as with our local PHA's, to see them to fruition in a
successful way.
Chairman Sarbanes. I appreciate your reference to the Hope
VI program because that is extremely important in eliminating
some of the most dilapidated public housing. And we are
replacing it across the country with mixed-income housing,
which I think most people agree is a vast improvement over the
previous situation. You are going to have to fight for the
money for those programs, though, as you well appreciate.
Mr. Martinez. Yes, sir.
Chairman Sarbanes. When there is a foreclosure, the
property goes into the hands of HUD, which then undertakes to
resell it. This is under the FHA.
After 3 years of increases, HUD's portfolio of single-
family properties began to decline in 2000. However, it appears
that the older properties in the inventory are very slow to
move.
Now GAO has recommended that HUD use specific incentives or
penalties to encourage contractors to reduce the number of
properties that are in the inventory for longer than 6 months.
What is your view of that GAO recommendation?
Mr. Martinez. Senator, GAO was good enough to brief me
thoroughly on that issue. It is quite clear that there needs to
be more done to ensure that particularly the older stock is
moved quickly.
What can occur clearly is that as the older homes continue
to be in foreclosure and not back into homeownership, that that
creates a deterioration in the areas where these houses are
that impacts the neighborhood, that impacts the whole area.
So I think that is a real priority and a real important
thing that we must do, is to supervise these contracts in a way
that they can effectively move the stock particularly of the
older houses out of this inventory. And I think also, frankly,
as we may be viewing an economic cycle that is not as favorable
as we have had, that perhaps more foreclosures could even be
forecasted. And I think it is important that we be prepared to
aggressively move forward to ease that stock of oversupply and
to ensure that HUD does what it needs to do to monitor the
contractors and to ensure that they are doing what the contract
calls for them to do.
Chairman Sarbanes. Now HUD has put in place recently a
program by which it transfers to local governments or
nonprofits significant portions of the FHA inventory at a
discount. Some local groups have raised concerns that the
discounts are not adequate to allow the home to be brought up
to code and then sold at local market prices.
Will you work with groups like the Neighborhood Housing
Services, the Enterprise Foundation, and the Local Initiatives
Support Corporation, all of which have I think done really
exemplary work in trying to address our housing needs?
Will you work with such organizations in order to try to
address this problem of turning over properties to these
nonprofits in order to upgrade and move the housing stock?
Mr. Martinez. Certainly, Senator. And I think showing some
flexibility in the administration of programs like that is
necessary in order to have the kinds of results that I think we
must have. But I certainly will address that issue and look
forward to perhaps seeing some results that we can report back
to you.
Chairman Sarbanes. Well, thank you very much. My time's up.
I do want to note, Secretary Rubin, the Secretary of the
Treasury, has taken on the chairmanship of the Local
Initiatives Support Corporation, which we very much appreciate,
and I think is some indication of the quality of that
organization and the Enterprise Foundation, the Neighborhood
Housing Service. There is some very good expertise that has
been built up in the nonprofit sector with respect to housing.
Senator Gramm.
Senator Gramm. Thank you, Mr. Chairman.
Mel, first of all, let me thank you for your excellent
opening statement. I think it is clear that we are going to
have a good working relationship with you.
I do think, with the economy getting softer, we are likely
to have more property come into HUD ownership than we have had
in the boom times of the last 4 or 5 years.
I come from a State where, in the 1980's, we had tens of
thousands of people who simply walked off and left mortgages
and houses, which then came into the ownership of the Federal
Government. And looking back at that experience, it is clear
that the best thing that we did was simply to go ahead and put
that housing on the market and sell it and get it into private
hands where it could be managed.
I think as you look at our experience during the 1980's,
where literally in a city like Houston we came into the
ownership of 30,000 or 40,000 housing units at any one time,
that our efforts to try to manage those versus getting them
into the hands of people who would invest their money, was not
very successful. But that is something that we have to look at,
and it seems to me that it is an area for you to go back and
look at.
In discussions of your nomination and media coverage, there
was only one issue raised, and I wanted to give you an
opportunity to give us your response. And that was that you
applied for a license from the FCC and were turned down.
I do not know that every time we are turned down, we are
required to give a public accounting. I remember when I was a
freshman in college, I had this great idea of writing Sophia
Loren about going out with me. It was a brilliant idea, I
thought.
[Laughter.]
And I thought it would be so novel, she might do it. But as
it turned out, she rejected me. No one's ever asked me to
justify why she did not think it was a good idea.
[Laughter.]
But give us sort of a summary of your application for the
license and the rejection and any information you think we need
to have on it.
Mr. Martinez. Certainly. Thank you, Senator. I would
certainly be happy to do that.
In the early 1980's, it was suggested that perhaps a new
station would be coming to the Orlando area and that a group
might be put together to apply for a license.
Bottom line--what happened is that there were eight
competing applicants for this license. Out of the eight
applicants, there could only be one winner. The FCC at that
time had a competitive type of system that they would engage in
where basically you would just look at each applicant in terms
of the way in which they would fill what was called the public
interest, the best public interest.
Our application did not make it and the rationale by which
one had to be picked and seven others denied in our particular
case had to do with the corporate structure that had been set
up.
I had been willing to be an investor in this venture, but I
was not willing to leave my law practice to become a full-time
radio or television station manager or employee. Full
integration was awarded higher credit.
We set up an A and B type stock holder relationship in the
corporation. I say we. The lawyer handling the matter did. I
was just an investor as a B stockholder.
Ultimately, it was felt by the administrative law judge
that a competing applicant had a better application because all
of those investors were also going to be full-time managers of
the station.
Our class A and B situation, it was found that while some
of
us in the B class did exercise some managerial type of interest
in
the matter, we were not going to be full time at the business
of the
corporation. We were never denied the license for any reason
other than the fact that a competing applicant had what they
perceived at the time under the rules at that time to have a
better application.
Our application was found to be sufficiently good that, had
they not had slightly more points, we could have easily been
awarded the license.
Senator Gramm. Well, thank you for clarifying that point.
And Mr. Chairman, I don't have any further questions.
Chairman Sarbanes. Senator Reed.
Senator Reed. Thank you very much, Mr. Chairman.
Let me return again to the issue I brought up in my opening
statement, which is the exposure of children to lead poisoning.
A staggering 190,000 children in the country have been
estimated to have elevated lead levels. And that is primarily
due to the housing they live in. And for many families, low-
income families, they have a choice between any housing at all
and housing that harms the health of their children.
In major cities like St. Louis and Baltimore and Milwaukee
and Chicago, over 20 percent of the children screened have
elevated lead levels. All of this has produced a response by
HUD over the last several years. Beginning in 1993, HUD's
office of lead hazard control has awarded about $550 million in
competitive grants to communities to abate lead. And so we have
established an infrastructure around the country.
But the issue that we face today is will we continue and
build on that record? And I hope today, Mr. Secretary, that you
can commit to us that you will seek as a minimum, and I
emphasize minimum, at least the $100 million that was
appropriated last year
for the office of lead hazard control in HUD. Could you do
that, Mr. Secretary?
Mr. Martinez. Certainly, Senator. I think that is an
important issue. I know you feel passionately about it. I
certainly can well understand that when we are talking about
young lives, a 10-year timespan by which this scourge may be
out of our housing stock, while a short time in bureaucratic
years, is a lifetime to a child who might become prey to this
sort of affliction. So I have to tell you it is something that
I, when it comes to children, I feel deeply about and I think
is something that will have my heart as well as my attention.
Senator Reed. Thank you very much, Mr. Martinez.
Let me also pick up on a point that you raised which is a
common concern of all of us here. And that is homeownership,
particularly among low-income communities, particularly among
minorities in this country because, as your statement points
out, there is a significant differential in homeownership in
the majority community and homeownership in the minority
community. One thought and proposal that I have advanced is a
homeownership tax credit.
Essentially, it would give tax credits to financial
institutions if they agree to provide zero interest second
mortgages that would be payable in 25 years, presumably when
the property is sold. This would allow a lessening of
downpayments and would make homeownership much more affordable.
I wonder if you would be very interested in pursuing this
approach, as well as other approaches.
Mr. Martinez. Yes, Senator. I think not only does it have
my interest, but I think it also has the interest of the
President-elect. And I think I will have his support and
assistance as we seek to obtain that type of new initiative to
increase homeownership. It is clear that the largest barrier to
homeownership is the down payment. And so, if we can facilitate
that in any way that we can, particularly in partnership with
the private sector, I think that is something that we would be
well advised to do.
Senator Reed. Thank you. Another aspect of the housing
dilemma we face is not just making existing homes and rental
properties affordable. It is creating and building new homes
and new rental properties.
Have you ever thought or given additional thought to a
housing trust fund, some proposal in which we would reserve
money and commit that money to actually stimulating the
construction of new housing units?
Mr. Martinez. No, Senator. That is not something that I
have had any first-hand information on or work with. But I look
forward to coming back to you on that issue and if we can work
together and get more of your ideas on that, I am certain that
it is something that we can look into and follow up on.
I think that anything we can do to not only look to the
affordability of housing, but also to the availability of
housing, it is part of what we must do. We must look at both
ends of the spectrum, affordability and availability.
Senator Reed. There has been discussion in these questions
with respect to the FHA. Could you elaborate on your vision for
the FHA, what you feel the challenges are and what you would
like to see FHA become in the next several years?
Mr. Martinez.There is two or three areas to talk on that.
One is, certainly the GAO right now has under study what the
appropriate level of surplus might be on the FHA fund, if there
is a surplus. I think it is very important that we await that
report before making any commitments. One of the questions that
I have asked is whether a 2 percent reserve level is an
adequate reserve level.
I frankly do not have a final judgment on that. But I think
it is a good question to ask and I think that we need to work
with those who would have some expertise in the area to counsel
on what the proper level of reserves might be. So that is one
area. We need to look at that.
In addition to that, I think that financial institution
counseling at the front end of homeownership, teaching people
how to be good homeowners, how to maintain their properties.
But also, how to manage their financial lives in a way that
would allow them to meet their commitments.
I think that is something that can help on this foreclosure
problem we were speaking of earlier because, frankly, we are
looking at it at the front end, not only at the back end, and
what to do with foreclosed properties. So those would be two
areas in which I would hope the FHA can have a very active role
and help with those two areas of concern.
Senator Reed. Thank you very, very much, Mr. Martinez, and
good luck.
Mr. Martinez. Thank you, Senator.
Chairman Sarbanes. Thank you, Senator Reed.
Senator Allard.
Senator Allard. Thank you, Mr. Chairman.
I would suspect, Mel, that as a local official, you have
had some experience in dealing with Federal regulations and
rules that come down. And as I mentioned in my opening
statement, this is an area that I would like to have you take
some time to review. I would like to have you discuss with the
Committee some of your thoughts about reducing too many
mandates from Washington coming down on local officials. And
also, I might have you comment a little bit on RESPA--the Real
Estate Settlements Procedures Act.
I have had an opportunity to sit in on some closings on
some homes in Colorado. I do not expect it is much different in
Florida. The homebuyer has a stack of papers about like so
(indicating) to go through. That is a stack of 6 inches of
papers there.
Obviously, they have to sign many of those papers. But in
the closing process, they do not obviously have an opportunity
to read all those papers. I think they are overwhelmed by
information.
And I often think in my own mind, if somehow, we could
shorten that stack, of information that they have to review,
they would have a better understanding of what their commitment
is and perhaps this would help considerably. And I thought you
might just in general talk a little bit about how you are going
to approach these issues.
Mr. Martinez. On the second issue, I think it is not just
about the opportunity to be informed, but it is the opportunity
to really know what it is you are signing and the important
information that may be contained there, obviously, a closing
on a home is the largest single financial transaction in the
lives of most Americans.
We need to do whatever is necessary to ensure that,
particularly people who are buying their first home, have a
good sense of understanding of what it is they are doing, what
it is that is truth in lending, if you will, but what it is
that their financial obligation
is and what it is that their true interest rates that are going
to
be charged.
So I think those issues are important. I think it is
thinning out the regulatory morass that they have to have in
front of them. But at the same time, being better informed. And
perhaps, again, some counseling with some folks would be a good
thing at that front end or that closing time of that
significant financial decision.
With respect to the HUD bureaucracy from a local
perspective, I think, obviously, all local officials and I know
Senator Enzi would appreciate this, we hate unfunded mandates.
You hate to be told what to do and at the same time not have
the funds with which to do it.
Sometimes the very cost of just the paperwork and the
production of the request for a grant really discourages some
local entities from even applying because, frankly, it just
seems to be such a daunting task.
I was just intrigued when the director of our area of
affordable housing in county government told me that we were in
the market for someone who was a HUD expert so that that HUD
expert could come into county government and be paid by us just
so that we could communicate effectively with HUD, so that we
could effectively access the agency.
Frankly, that is something that I have very little patience
for. And I am not sure what answers I would have in terms of
turning something like that around, but I think it is something
that we have to address. It should not require a HUD expert to
apply for a HUD grant. I do not think that we are any--although
it has been challenged recently--any dumber in Florida than any
place else.
[Laughter.]
But the fact is that we really should be able to thin out
the bureaucracies for people to be able to more directly access
HUD.
Senator Allard. I want to compliment you on the fact that
you have already taken a first step that I think is important.
You have had an opportunity to meet with the General Accounting
Office, which is an organization that we have worked with
closely. I wonder, have you thought any more about where you
may go as you look to the management issues there at HUD?
We have looked at the fact that they are considered ``High
Risk'' by the Inspector General, as well as GAO. Both have
given somewhat unfavorable testimony. But they also say that
since that testimony, there has been some effort to improve
some of the programs at HUD. Maybe you can share with us some
thoughts where you may turn for management advice.
Mr. Martinez. Senator, no doubt that there have been
successes at HUD. No question about that.
And the prior secretaries, including Secretary Cuomo, ought
to be commended for those. But as I talk with GAO, really, much
more needs to be done.
When we look at the 20/20 management reforms, one of the
areas in which I believe we must try to seek guidance is
whether or not all of those reforms are having the desired
effect. The re-
duction in manpower at HUD, which was very significant and
deep, may not be the best way for the future management of
HUD to continue.
In other words, certainly no further cuts would be prudent.
In addition, it may be that the manpower currently in place is
not sufficient to properly manage things like the FHA contracts
on foreclosed homes, so that we can effectively impact how HUD
does business. There have to be people on hand to be able to do
that.
So I know that there has been a current undergoing study by
the National Association of Professional Administrators. I look
forward to seeing what that study would reveal about where HUD
currently is on management.
I do not look to go in to revamp HUD, but to come in and
look at what has been working in the reforms on management and
what needs to be redirected in a different arena, in a
different area, to ensure that we get the result that I think
all of us want.
Senator Allard. Thank you.
Thank you, Mr. Chairman.
Chairman Sarbanes. Thank you, Senator Allard.
Senator Miller.
Senator Miller. It was an excellent and comprehensive
opening statement. You answered many of my questions. There is
one area I would like to get a little bit more of your thinking
on because I know you have had some experience in it and have
given it some thought.
Right now, as you know, government at a lot of different
levels is being forced to tackle the problem of managing
growth. You have had to do that in Orange County. Atlanta, one
of the fastest-growing cities in the Nation, is struggling with
that right now with all kinds of competing demands, not just
providing adequate and affordable housing, but also controlling
property taxes, maintaining an efficient transportation system
and preserving open spaces. And you can go on and on.
We have been told that in the next 50 years, the U.S. can
expect to face the same problems that Atlanta is dealing with
because the Nation's population will grow by 50 percent over
the next 50 years. So this is something that is going to be
with us for a long time.
My question is, as Secretary of HUD, what do you think the
role of the agency should be in helping communities plan for
managed growth? Are there any services that you believe HUD
could and should provide to local and regional communities to
help with this problem?
Mr. Martinez. Senator, I do not think there is any question
but that is part of the mission of HUD. I do not think it has
been at the forefront of what HUD has done in the past. But I
do believe that under my administration, assuming the Senate's
confirmation, that I would have an opportunity to bring those
talents that I have developed and the skills that I have
acquired, and the experiences that I have had in the local
level in managing growth to ensure that we can begin that
dialogue on a national level. It is about not creating the
failed cities of the year 2020 today. It is about finding ways
in which we can grow in a way that allows for quality of life
to be what we want it to be in a prosperous America.
I think Atlanta is a prime example of the problems of
abundance, frankly. And Orange County is not too far behind.
Issues of air quality. I know that some of the things that
Atlanta has had to do have been drastic and severe in terms of
dealing with some of these very, very significant issues. But,
Senator, I think the way in which I might be able to best lead
in this area and where I would intend to go with the issue is
to look for partnership and inter-agency relationships.
The problems that Atlanta has faced as it looks to manage
its growth are really problems that go beyond the scope of HUD,
but where HUD might play a lead role. They are really problems
where we need to talk to Secretary-designee Thompson in the
area of transportation. Where we need to be talking--I am
sorry. HHS. Because they are human problems. They are people
problems.
We also need to look to the Department of Transportation.
We need to look to EPA as we look at environmental concerns.
They are so prevalent in Florida, rich in wetlands and
other very, very dear and areas worth preserving. So it really
is a multidisciplinary issue. It is something that cannot just
reside within the confines of HUD. But where HUD might play the
lead role in seeking assistance from these other agencies in
ways that we can get this debate, get this discussion about how
we grow in America on a higher plane and really on the radar
screen where it has not been on a national level.
Senator Miller. That is good. Thank you.
Chairman Sarbanes. Senator Enzi.
Senator Enzi. Thank you, Mr. Chairman.
I just want to comment that I have been really impressed
with the depth of knowledge and the very positive manner in
which the questions have been answered.
I thank Mr. Martinez for the opportunity to meet with him.
I will have other questions at later dates on more specific
things that he is doing. I do not have any questions at the
moment. Thank you.
Chairman Sarbanes. Thank you very much.
Senator Carper.
Before you came, we expressed our pleasure at the new
Members who are coming onto the Committee. And of course you
are one of them. We are very pleased to have you join this
Committee.
We know you have had experience with these issues when you
served in the House of Representatives and then of course
experience with them as the Governor of the State of Delaware.
We are really pleased that you are coming on to help us with
our work.
Now others have made opening statements. You may want to do
that as well and then proceed to your questioning.
Senator Carper. Mr. Chairman, thank you. I am delighted to
be here. I had the pleasure of serving on the Banking Committee
in the House for 10 years and the Housing Subcommittee for 10
years. These are issues I care about. We welcome our designee
and we wish you well and thank you for your stewardship in
Florida and for your presence here today and your testimony.
I want to express my thanks to the Chairman for his
encouragement, encouraging me to seek membership on this
Committee. I am delighted to be here with my old governor
colleague, Zell Miller, and to have a chance to get to know
Senators Allard and Enzi better in the years to come.
COMMENTS OF SENATOR THOMAS R. CARPER
Senator Carper. And I think I will go right to the
questions.
Mr. Martinez. Sure.
Senator Carper. Let me start off by reflecting back.
Senator Miller and I wore other hats as governors. We served in
the National Governors Association.
One of the great things about the National Governors
Association is that we established a clearinghouse for good
ideas. It was called the Center for Best Practices.
And the idea was that 50 States, 50 laboratories for
democracy. A lot of us have similar problems that we face. And
what we did is we took our best practices and shared them with
everybody else.
Sometimes you look at Federal agencies and we are pretty
good at the business of writing rules and regulations. Maybe
not quite so good at figuring out what is working and to be
able to distribute and share that information in an effective,
timely way with others around the country. Let me just ask your
thoughts on how we might do that better and how you might
pursue that as Secretary of HUD?
Mr. Martinez. Senator, I come from a State where I think we
have taken great pride, whether it be on issues of growth
management or many other issues. Really, in fact, some really
good government issues where I think Florida has led the way. I
do believe that it is important that we share the knowledge and
we share the opportunities for doing things in yet a little
different way.
I have had the opportunity to chair the governor's task
force on growth management in Florida. And in doing so, we have
come up with some things there that are going to be reported in
the next few days to the Florida legislature, which I think are
innovative, which I think are cutting edge and which I think
may be things that the whole Nation may wish to look at.
And so, I do believe in innovating. I believe in borrowing
good ideas. And I think, frankly, that is the greater part of
wisdom, is not in reinventing, but in borrowing from others who
have done something particularly well. So I would look forward
to that opportunity. And perhaps the Center for Better
Practices is something that we should expand to Federal
agencies as we try to serve the public interest in a different
arena.
Senator Carper. I had the pleasure of serving as the
Chairman of the NGA and later, as Chairman of the Center for
Best Practices. It is one I am going to come back to with you
again in the future and would urge you to pursue it and would
offer whatever help that I can.
Mr. Martinez. I would look forward to working with you on
that and your ideas on that would be really most welcome.
Senator Carper. Thank you. Let me ask--Zell Miller already
asked my question on the smart growth. So I am going to leave
that one alone for now. But when I was in the House, we looked
at public housing as a lifetime entitlement. We said, you know,
we do not think that is what it was intended to be.
Just like welfare. It was not intended to be a lifetime
entitlement. But for a lot of people, it became that. And the
reason why welfare became a lifetime entitlement is because we
set up, through the best of intentions, a system of incentives
and disincentives where people are actually better off
financially for staying on welfare than they were in getting
off of it. I think we have done a similar kind of thing with
public housing in many instances.
In the State of Delaware, we took advantage of an
opportunity to experiment more broadly with housing and to take
a page from what we have done in welfare reform in this
country.
What we have done is limit it, time limit it, to generally
3 years, the amount of time people can spend in public housing
in our State. Not all of it, but a lot of our public housing,
because that is managed by the State housing authority.
And we made it possible for folks, as they increased their
earning power, their education, their earning power, and their
income, to not see their rent payments go up. But, rather,
instead of that incremental increase in rent to be paid to
their housing authority, it would simply go into an escrow
account and could be drawn from later on to provide for a
security deposit on an apartment, a downpayment of closing
costs on a house.
I just want to ask. This is something that we have been
given the opportunity to sort of lead the way on. Let me just
ask if you are familiar with initiatives of this kind,
generally your acceptance of this kind of experimentation. What
do you think of it?
Mr. Martinez. Senator, first let me say that when I served
as a local housing official in the Orlando Housing Authority,
that one of the saddest things that I remember seeing, frankly,
was a nice gentleman who was at one of our housing meetings
with his grandchild. He shared with me how he had lived in
public housing since he was his grandchild's age.
And I thought, how sad, that three generations of Americans
had yet found not the way to move out of that situation and
into a life that would bring them more joy and happiness and
prosperity. And so, I have always been taken by the idea that
public housing ought to be transitional. It ought to be there
for those that need it. And frankly, Senator, there are some in
our society who will always need to be in some sort of living
condition that is other than as we would have it.
But at the same time, for those who have an opportunity to
move out of this situation, it is something that we should
encourage and we should work hard to help them to do.
I do not think it is something that we can do in a way that
does not show the kind of compassion I think we must have for
those who may not know how to get out of the situation.
But I would look forward to working with you. I am not
familiar with the programs that you mentioned, but I would look
forward to working with you. I am very, very receptive to
those. I think it is part of, as I stated earlier before you
came, about the fulfillment of the promise of America which has
been so true in my life.
And quite frankly, I think we need to help others to reach
that and getting folks off of welfare or getting them into
housing that is not public housing, is part of that
compassionate way in which we have to help folks in our society
that heretofore have been denied the opportunity or foreclosed
from the opportunity of having their own home.
Senator Carper. Thank you. I look forward to working with
you on that.
Mr. Martinez. Thank you.
Senator Carper. Let me ask one other question if I could,
Mr. Chairman. We have a lot of financial institutions in our
little State.
I tell people we raise more chickens per capita in
Delaware. We have more corporations than any State in the
country. We build more cars per capita in Delaware. We also
have more banks per capita in our State.
Chairman Sarbanes. But you do not have a lot of per capita,
thought.
[Laughter.]
Senator Carper. But we have a lot of chickens, cars, banks,
and corporations.
[Laughter.]
Those financial institutions in our State have an
obligation under the Community Reinvestment Act to invest in
all segments of our community. Some of those banks are sort of
traditional community banks and others are especially banks,
credit card banks, wholesale banks, and so forth. But
collectively, they have helped make it possible in our State to
provide a homeownership rate which actually approaches 75
percent.
The national average I think is closer to 65 percent. And
they have been a wonderful partner, particularly with the
reduction of Federal dollars for housing, a wonderful partner
of ours in our little State to make homeownership a reality. I
would just be interested in hearing your views on the Community
Reinvestment Act and what role you see it playing in rebuilding
our communities and making housing--homeownership, rather--
possible for all of us.
Mr. Martinez. Senator, I think CRA have a very important
role to play in community building and allowing all Americans
to reach the dream of owning a home.
One of the things that I have done in the private sector is
serve as the director of a bank. And it is in that role I know
that at times it can be a headache for the private sector to
fulfill the CRA requirements. But I also know it is the right
thing to do and it is a good thing for communities.
I think access to credit and the opportunity for fair,
frankly, credit, is one of the ways in which we should help
Americans reach that dream of homeownership. It can come
through some counseling. It can come through working with
credible and serious financial institutions.
One of the issues I know this Committee has concerned
itself with is predatory lending. I think it is an abhorrent
practice. It is something that I, in my local government
official role, fought feverishly to see end in ways which were
different than this Committee would face, but which were also,
nonetheless, preying on our most vulnerable. So I think CRA is
important. I think CRA is something that I believe has made and
can continue to make a difference in the lives of many
Americans seeking their first home.
Senator Carper. Mr. Martinez, thank you again for being
with us today and for sharing your thoughts and your life with
us if you are confirmed. We talked about in this short time
three things that I am going to come back to you again if you
are confirmed, and I think you will be.
One of those is how do we better ensure that HUD serves as
a clearinghouse for what is working in our country to improve
the lives and the quality of lives and improve opportunities
for housing. The notion of public housing as a transitional
entitlement, not as a lifetime entitlement.
And finally, CRA, how we can make sure that, while not
imposing undue burdens on financial institutions, trying to
meet the responsibilities under the law, how can we ensure that
CRA continues to benefit people in all 50 States--your State
and mine.
Mr. Martinez. Thank you, Senator.
Senator Carper. Thank you very much, Mr. Chairman.
Chairman Sarbanes. Thank you, Senator Carper.
I have a few more questions, so we will begin a second
round, I will say to my colleagues, if others have some
questions that they yet want to ask.
Mr. Martinez, I was going to ask you about predatory
lending, but you made a very strong and forthcoming statement
in response to Senator Carper. So I will forego that, only to
underscore how pressing a problem I think this is.
We have had a very serious problem in Baltimore on the
flipping and the predatory lending. And a lot of things are
underway in order to try to address it.
HUD is in a position to play, I think, a major role in
doing this. Actually, HUD and the Treasury just issued a
report. And we hope you will carry through--are you familiar
with that report?
Mr. Martinez. Senator, only that I have heard there is such
a report and I know that you have great interest in this issue.
But I have not had an opportunity to review the report.
Chairman Sarbanes. Well, I commend it to you and I hope you
will be able to carry through on some of its recommendations.
Mr. Martinez. I certainly will do that.
Chairman Sarbanes. This is an outrageous situation. People
are being manipulated and exploited. And we need to bring it to
a halt.
In my opening statement, I mentioned the importance of
physical inspections, these real estate assessment centers
which HUD has established in order to have an accurate picture
of the condition of the public and privately-owned housing
which receive Federal funds. What is your view of the physical
inspection program?
Mr. Martinez. Senator, I think it is a necessary management
tool. I think it is a very important thing for those who live
in the housing that is being inspected. I think that what we
must do is to find a way that we can decentralize the
administration of this program in such a way that would allow
for regional variations in what is acceptable.
But I think that with some fine-tuning of the
administration of it, that it is something that has my full
support. I believe it is essential for the management of the
public housing stock that we do that. And so, I intend to
continue to move forward aggressively in that and fine-tune the
system so that it works evenly and in a credible way throughout
the country.
Chairman Sarbanes. The GAO, I might note, is extremely
supportive of maintaining the physical inspection program and
thinks it is a very worthwhile and important initiative. And I
am pleased to hear that you are of a similar mind.
With respect to affordable housing, most of our focus here
has been on homeownership, and that is important because I
share the view that you add a quality of responsibility and
interest on the part of the homeowner. We want to boost those
numbers.
However, the HUD worst-case housing needs study, as well as
the national low-income housing coalition study called ``Out Of
Reach,'' indicates that the families facing the most serious
housing needs are people with incomes below 30 percent of
median, people that need help finding affordable rental units.
I would like to draw you out a bit on your view of trying
to provide additional affordable rental units on the premise
that, as desirable as it is to move people into homeownership,
it is not possible to do it, at least not over the immediate
future, and we have to have rental alternatives for people.
What is your view of that?
Mr. Martinez. Senator, one of the things that I did as
Orange County executive was to task an affordable housing task
force early in my administration. One of the things that they
brought back as a finding was that 43 percent of the renters in
our community could not afford a market-rate rental. It is
indeed something that I have had to live with first-hand.
I understand the problem. I understand the concern. I think
that what we must do is encourage, whether it be through
continued tax credits or other ways, the marketplace to
continue to provide affordable housing units.
We obviously must continue to keep the Section 8 contracts
that we have, encourage their continuation, and make sure that
we, in all that we do, are trying to satisfy that need.
There is no question but that there is a continuing need
for affordable housing. And I understand that it is not just
about homeownership, but it is also about providing for those
who cannot own a home, an affordable place to live.
Chairman Sarbanes. Do you appreciate how serious a budget
challenge the renewal of the Section 8's is in terms of both
the vouchers and the project-based--I mean, you have the
immediate problem of just renewing what we are providing, let
alone expanding that. And that is a very large budget challenge
and I think it is going to be a big part of the role you must
play within the Administration as you interact with the OMB and
others on important budget questions for the department.
Mr. Martinez. Mr. Chairman, no question that that is so.
I yesterday had the opportunity to meet with your colleague
from Maryland, Senator Mikulski. And she was very good to give
me a very sobering bit of instruction on the budget process.
As of my meeting with her yesterday, that now has become my
number one priority in the transition. And I assure you that
the OMB group that is preparing the transition themselves will
be hearing from me often, frequently, and forcefully. She even
asked me to find out what 302(b) was. And I have already begun
the education process into what 302(b) might be.
Chairman Sarbanes. I think one of the sources of the HUD
administrative difficulties--and I have to go back some time
now--back beyond any of the secretaries that were mentioned
here today who have been trying to improve HUD's
administration--Kemp, Cisneros, Cuomo--is that HUD was being
used as a patronage place and people were being put into
responsible positions for political reasons without the real
competence or the demonstrated expertise to handle the jobs
they were being given.
I am interested to know sort of how much latitude you think
you are going to have to fill these important positions within
the department and what your attitude is in terms of the sort
of people you need to get in there to help you run this agency?
Mr. Martinez. I have been very, very fortunate that Vice
President Cheney, who has chaired the transition for this
Administration, has made it very clear to me that he considers
the management at HUD a high and significant priority that can
only be fulfilled if we surround the new Secretary with
capable, competent people to carry out the mission.
I am very encouraged by the array of folks that would be
interested and, frankly, I am also pursuing some folks who have
not expressed an interest, but who we might be able to recruit.
And I think in doing so, we will come up with a very strong
team. But I cannot under-emphasize the importance I place in
putting a good, strong management team to carry out this very
difficult mission.
This Administration is very cognizant that HUD does pose
some serious management challenges and I think they will assist
me in surrounding myself with the kinds of people that are
going to help me carry out that mission.
I also must tell you, one thing I am very interested in
doing is to have a very diverse look to the management of HUD.
I think it is important that this particular agency reflect the
people that it seeks to serve.
Chairman Sarbanes. Well, I am encouraged to hear that. I
think Secretary Cuomo has made very substantial strides. Part
of that was obviously contributed to by his ability to draw
into HUD some really top-notch professionals from across the
country who were recognized within the industry as just being
outstanding performers. I think you are going to need that kind
of help. And I really encourage you in your efforts to attract
it to the department.
Senator Allard, do you have any further questions?
Senator Allard. Mr. Chairman, I do not have any more
questions. I have a few that I would like to submit for him to
respond to in writing. I just want to congratulate you on a
very fine hearing. I think you have done a great job.
Chairman Sarbanes. Thank you.
Senator Carper, do you have anything further?
Senator Carper. One last quick one, if I could. The issue
of low-income tax credits, which was I think being discussed in
the last Congress, and it may have been dealt with and included
in the final package.
Is that correct, Mr. Chairman?
Chairman Sarbanes. It was included, yes.
Senator Carper. I do not know how familiar you are with
their use or utilization. But if you have any thoughts about
how we might use low-income tax credits more creatively, I
would be interested in those thoughts. And if that is not a
fair question----
Mr. Martinez. No, it is not an unfair question, Senator.
But it is one that I would prefer to get back to you on. I am
not really--at this point, I do not have any bright ideas that
I can share with you on how I am going to make that work
better. So I would prefer to work with you down the road. And I
note that that is an area of interest to you.
I think it can be very important to the outcome that we are
trying to obtain. But at this time, I really do not have any
additional information I can share with you.
Senator Carper. You realize that, as a result, I may not be
able to support your nomination.
[Laughter.]
Mr. Martinez. Well----
Senator Carper. Just kidding. Just kidding.
Mr. Martinez. Well, there is only four left. So----
[Laughter.]
Senator Carper. You are way ahead. You are way ahead.
Mr. Martinez. Senator Dodd just came back.
Senator Carper. All right. Thank you.
Chairman Sarbanes. Senator Enzi.
Senator Enzi. [Nods in the negative.]
Chairman Sarbanes. Any further questions?
Senator Dodd. Well, you probably answered them. And if you
haven't, I will submit them.
I apologize for running back and forth. We have General
Powell downstairs. We have just really completed the opening
statements in that Committee. So it will go on to this
afternoon. So consider yourself fortunate.
Mr. Martinez. Yes, sir, I do.
[Laughter.]
Senator Dodd. I will submit them with your permission, Mr.
Chairman, if they haven't already been asked.
Chairman Sarbanes. All right. As I indicated earlier to my
colleagues, we hope that Members can submit any further
questions they have in writing by the end of the day.
And Mr. Martinez, we hope you will respond to them as
quickly as possible so that the Members will have the benefit
of your answers as we try to move the nomination forward. Let
me make this final observation for the record.
All of Mr. Martinez's papers have been submitted to the
Committee that are required and they are available for review
by Members. I know many members have already reviewed them.
Mr. Martinez, I want to get one thing on the record,
though, before we bring the hearing to a close.
First of all, I take it you are aware of and have agreed to
meet the conditions required by the Office of Government Ethics
in order to bring you into compliance with ethical standards.
Is that correct?
Mr. Martinez. That is correct, Senator. A memorandum has
been signed by me.
Chairman Sarbanes. Right. And I think that memorandum is on
the record for Members of the Committee to inspect if they so
choose. If there are no further comments, we very much
appreciate this opportunity to interact with, I think it is
safe to say, the Secretary-to-be, and we look forward to
working with you in a positive and constructive fashion.
Mr. Martinez. Well, Mr. Chairman, if I might just say a
word of thanks to you and the way you have conducted the
hearing. But also, in your courtesy in seeing me, and all the
Members of the Committee.
I just want to thank all of you for giving me this
tremendous opportunity and this high honor. And I am grateful
to each of you.
Thank you.
Chairman Sarbanes. Good luck to you.
The hearing is adjourned.
[Whereupon, at 12:10 p.m., the hearing was adjourned.]
[Prepared statements, biographical sketch of the nominee,
response to written questions, and additional material supplied
for the record follow:]
PREPARED STATEMENT OF SENATOR PAUL SARBANES
I am pleased to be able to hold this hearing on the confirmation of
Mr. Martinez. I met with Mr. Martinez in my office last week, and found
him to be serious about and committed to the enterprise he is about to
undertake. First and foremost, I was encouraged by his statement when
first nominated, when he said:
``I will work hard to ensure that every American has every
opportunity to have affordable housing.''
Mr. Martinez, I look forward to working with you to achieve this
goal.
I want to take a few opening moments this morning to review the
substantial progress HUD has made over recent years, as well as to set
out what I see as the challenges facing Mr. Martinez and the
Department.
HUD has had a history of being a troubled agency. While many of its
programs do a good job of providing decent homes to millions of poor
and working families, it has proven to be a difficult Department to
manage.
In 1994, in fact, HUD was put on the General Accounting Office
(GAO) ``high risk'' list, the only agency to be so listed. However, as
a result of concentrated efforts by Secretary Cuomo and his top staff,
I understand that the GAO will announce this afternoon that HUD is now
off the high risk list. They achieved this result by working tirelessly
to correct the problems in financial, oversight, procurement systems,
and the like. It is widely known that Secretary Cuomo has devoted
significant time and effort to address these managerial issues.
This is by no means to say all of HUD's problems have been solved.
But it does mean that Mr. Martinez will take over a Department with a
management system in place that is moving HUD in the right direction. I
believe his primary job, and I hope he will agree, is to sustain this
progress.
Let me emphasize a couple of these reforms. First, I believe it is
extremely important to continue the physical inspections of public and
assisted housing.
We need to continue to support the Federal Housing Administration
(FHA), which has played an important role in helping us reach
historically high levels of homeownership, including record levels
among black and Hispanic families. FHA has
offered millions of Americans their opportunity to take part in the
American dream of homeownership. To keep that dream alive, Mr. Martinez
needs to continue HUD's efforts to identify and sanction lenders and
appraisers who consistently make bad loans. Last Congress, I introduced
legislation to codify this program, which is called ``Credit Watch.'' I
hope to have Mr. Martinez' help in passing that legislation this year.
We need to continue the work HUD has only just started, with the
Treasury Department, to fight predatory lending, by enforcing the fair
housing laws and other statutes, and by working with the Congress to
develop new tools to fight these abusive practices.
To sustain the broad progress noted by the GAO, Mr. Martinez will
have to hire capable Assistant Secretaries and other staff who have
demonstrated competence in their fields. I know that Vice-President
elect Cheney committed to Mr. Martinez that he would have the
flexibility to hire such qualified staff. I urge Mr. Martinez to do so.
I want to conclude by noting that one of Mr. Cuomo's significant
accomplishments is the success he had in making housing an important
issue inside the Clinton Administration, a success that was made
concrete by increasing budget resources for HUD over the past several
years.
Mr. Martinez will face the challenge of convincing his colleagues
at OMB of the importance of sustaining the budget success achieved
under Secretary Cuomo. Much of what we seek to accomplish, whether it
is better education, more effective job-training, getting people from
welfare to work, or other efforts to empower people, rests upon the
premiss that people have an affordable place to live in a safe and
stable neighborhood.
I want to inform my colleagues that it is my intention to work with
Senator Gramm to ensure that this nomination is approved by the full
Senate as quickly as possible after we receive the formal papers from
the President on January 20.
----------
PREPARED STATEMENT OF SENATOR PHIL GRAMM
Senator Phil Gramm made the following statement today at the
hearing of the Senate Committee on Banking, Housing and Urban Affairs
on the nomination of Mel Martinez to be Secretary of the Department of
Housing and Urban Development: I want to thank Senator Sarbanes for
holding this timely hearing. It is my intent to have a vote on this
nomination early next week.
I also want to thank Senator Sarbanes for his input in the
Committee's legislative activities in the last Congress. I think people
got it down in the media coverage of events in the last Congress that
we were somehow in partisan conflict, but the reality is we had a very
active and successful legislative agenda in the last 2 years. We passed
perhaps the most important banking bill in 60 years, and the final
passage of that bill was virtually unanimous. Every major action we
took was, in the end, a bipartisan action.
I think the lesson of that is that we need to make an effort to be
more bipartisan to begin with since we always end up there anyway. I
want to pledge my commitment to that effort. I want to say to the new
Members of the Committee that I look forward to working with you. As
Chairman, I will be looking for good ideas, and I do not care if they
come from Democrats or Republicans.
Mr. Martinez, I want to welcome you. I cannot think of an agency
that would be more difficult to run than HUD. On the other hand, I do
believe that there is a bipartisan consensus that we want to get the taxpayers' money's worth for the effort that we have undertaken to
provide quality housing and to provide an environment in which the
maximum number of people can go on to build and buy their own homes.
I would ask you to learn what the agency does, to make an effort to
make every program within its jurisdiction work, whether you agree with
them or not. Once you have tried to make them work and have learned
whether they work, then I would urge you to come back to this Committee
and ask us for the legislative changes to maximize your ability to get
your job done.
We are open to changes at HUD. The department administers many
different programs instituted at many different times under many
different circumstances. Consolidating and rationalizing those programs
could be a very productive thing to do. I am excited about your
appointment. I think you bring a practical experience at the local
level, which is very much needed. Your compelling life story is a clear
message to anyone that if you work hard, you can succeed in America.
This is a country where routinely ordinary people do extraordinary
things. Your life is a clear example of how America works.
I want to pledge my support for your nomination. I look forward to
working with you, and I hope you feel free to come and work with this
Committee in partnership to seek any changes you need to do your job.
----------
PREPARED STATEMENT OF SENATOR MICHAEL B. ENZI
Thank you, Mr. Chairman, for conducting this hearing today to
consideration the nomination of Mel Martinez as the next U.S.
Department of Housing and Urban Development Secretary. Mr. Martinez's
commitment to housing and community development has created a network
of people, not only in Orange County, but nationwide that is excited
and knowledgeable about these public policy issues. This excitement and
knowledge has encouraged community leaders nationwide to find solutions
to their housing and community development needs.
Homeownership is often portrayed as an integral part of the
``American dream.'' Raising the home ownership rate is the goal and
desire of most community leaders and social activists in this country.
As an economic indicator, the housing market component impacts many
sectors of the economy. For example, wages and tax revenues are
generated by the creation of jobs from housing construction.
Homeownership can improve the economy by making citizens self-
sufficient and more stable. Homeownership rates have increased
nationally over the past couple of years. Industry sources predict the
market to continue to grow, though slowed somewhat by decreased demand.
Increases in housing sales coupled with the high rate of homeownership
point to a healthy outlook for the United States housing industry.
In my home State of Wyoming, 70 percent of the population in 1998
owned homes, ranking Wyoming 22nd among the 50 States. Nevertheless,
rural States need better assistance in establishing homeownership
opportunities for their constituents. Some States have begun these
reforms on their own admission. Because Wyoming does not have one
single State housing agency, Wyomingites have mobilized their
initiatives in order to ensure greater homeownership in my State. For
example, HUD, the Wyoming Community Development Association, Habitat
for Humanity, Housing Partners Incorporated, Fannie Mae, and the Bureau
of Indian Affairs have come together to create an Indian Housing
Coordinating Committee in order to facilitate better access to
affordable housing for the Arapaho and Shoshone tribes on the Wind
River Reservation. Mr. Martinez's confirmation as HUD Secretary would
ensure these consumers, organizations, and manufacturers alike would
enjoy reforms that call for an increase of safe and affordable housing
nationwide, especially for the more rural areas of our country like
Wyoming.
In closing, I support the confirmation of Mel Martinez as Secretary
of the U.S. Department of Housing and Urban Development. Thank you, Mr.
Martinez, for taking time out of your busy schedule to meet with us and
I definitely look forward to further discussing housing and community
development issues with you and your staff in the months to come.
----------
PREPARED STATEMENT OF SENATOR ZELL MILLER
Mr. Chairman, It is an honor to be a Member of this Committee and
to be a part of this morning's important confirmation hearing for Mel
Martinez to be Secretary of Housing and Urban Development. This is my
first hearing with the Banking Committee, and I am pleased that the
work we are undertaking today pertains to such important issues for our
country--affordable housing and the development of our urban centers.
As a Senator representing the State of Georgia these issues have
great impact on areas such as Atlanta, Augusta, Macon and other
metropolitan areas across my State. But they also affect rural
populations, traditionally the most economically challenged in Georgia.
Housing is not limited to the big cities. For example, in the suburbs
of Georgia throughout the last decade we saw a decline in the number of
units affordable to low-income families. Furthermore, today over one-
third of households facing ``worse-case'' needs are in the suburbs.
Economic development initiatives are still needed greatly in
Atlanta and other cities around the country. We must continue to fight
urban poverty and the many social ills it brings to this Nation. I
believe as the nominee approaches this job, he must do so with the
outlook of not serving just one sector of America, but all of America--
urban and rural. I look forward to hearing your testimony, Mr.
Secretary-designate, and also to your responses to the Committee's
questions.
Thank you Mr. Chairman.
----------
PREPARED STATEMENT OF SENATOR JON S. CORZINE
Thank you, Chairman Sarbanes. It is a great honor to be joining
this Committee and serving with you, with Chairman-to-be Gramm, and all
the Members. Given my private sector background, I am truly pleased
about the assignment.
As a new Senator, I will want to take some time before jumping into
some issues, but our responsibilities overseeing the Nation's financial
services industry, monetary policy and the housing sector are subjects
I feel are home turf. I hope that through time I can make a real
contribution. Today's hearing deals with one aspect of the Committee's
jurisdiction that is a very important priority for the country, my
State, and me.
Like many other parts of the country, New Jersey suffers from a
real shortage of decent, affordable housing in many communities. In
fact, New Jersey's rental costs are among the very highest in the
Nation. We also have some of the poorest and most concentrated senior
communities in the country. These communities desperately need support
for economic and community development. HUD can and should play an
important role in addressing these problems. I look forward to working
cooperatively with the Department to support their mission and help
find solutions for my constituents and others with similar needs.
Secretary-designate Martinez and I have had a good first
conversation about these concerns. I know he has personal experience in
efforts to support affordable housing, and I am very pleased that the
President-elect chose someone who does.
Obviously, the job of HUD Secretary is a huge challenge in many
ways. The programs are complex. And the needs are diverse. The
bureaucracy can be cumbersome. The problems are numerous.
But perhaps the greatest challenge facing a HUD Secretary is the
difficulty of sustaining housing as a national priority and, in
particular, fighting for adequate funding. In many ways, HUD is at the
mercy of the Office of Management and Budget, and Congress's budget
priorities. You will need to be aggressive, creative and persistent to
ensure that housing gets its fair share.
The fact is, while the issue gets little media attention, more than
5.4 million Americans either must pay more than 50 percent of their
income for housing or live in severely inadequate conditions. And this
number is increasing, as the real estate market outpaces the wages of
working families. Today in many large cities, average blue-collar
workers cannot come close to affording an average two-bedroom
apartment. That is not right. And, as a Nation, we ought to do
something about it.
The Federal Government is now looking at projected surpluses that
may exceed $5 trillion over the next 10 years. In my view, some of that
surplus should be used to help those families who today cannot afford a
decent place to live. Surely that is a higher priority than providing
large tax breaks to the very wealthy.
So, Mr. Martinez, you have a heavy responsibility. And I want to
emphasize that I want to support you in your efforts. I hope you will
fight hard for the people who will be relying on you. And if there ever
is any way I can be of help in pursuing some of our shared objectives,
I hope you will ask.
Thank you, Mr. Chairman.
----------
PREPARED STATEMENT OF SENATOR CHARLES E. SCHUMER
It is a pleasure for me to be here today, I want to congratulate
HUD Secretary-designate Martinez on his nomination and thank him for
being here today to answer questions from Committee Members.
You come highly praised by political, industry and advocacy
community leaders and your record of public service is a stellar one.
Having also had the privilege of meeting with you to exchange views on
the state of our Nations' housing and community development efforts, I
am convinced of your commitment to improving and expanding housing
opportunities for American families. For those reasons I am proud to
extend my support for your confirmation.
As you know, America has enjoyed a great deal of prosperity over
the course of the past 8 years. More people than ever are investing,
unemployment figures are at all time lows, and more families than
ever--67 percent of all American households--own their homes. But there
is a flip side to prosperity--and no where in America is the paradox of
the strong economy more severe than in my State, New York, and
particularly in New York City.
Every day there, it becomes harder and harder for middle-class
people to buy a home or rent a decent, affordable apartment--and the
problem of predatory lending threatens to undermine the progress we
have made toward developing underserved, lower-income and minority
communities.
Historically, our Nation has prided itself on its ability to
provide decent, affordable housing for all its citizens. But the issue
of affordable housing has been wrongfully moved to the back-burner of
the national public policy debate, and HUD, which received increased
funding during the Clinton Administration, still remains a woefully
underfunded agency that struggles to meet its difficult and extremely
important mission.
Mr. Martinez, I truly hope you appreciate the severity of the
housing crisis that plague cities and towns throughout New York and
across America. It is my hope that you will commit yourself and HUD to
the aggressive pursuit of solving the problems faced by millions of
families in our great Nation. In this time of enormous prosperity, we
must make every effort to ensure that all families have access to
decent, affordable housing.
In doing so, we reaffirm our commitment to the things that mean the
most to us as Americans--strong families, quality education, a vibrant,
robust economy and safe, livable communities.
Thank you Mr. Chairman.
----------
PREPARED STATEMENT OF SENATOR JIM BUNNING
Mr. Chairman, I would like to thank Mel Martinez for testifying
today and I would like to thank you for holding this hearing in such an
expeditious fashion.
I strongly support the nomination of Mel Martinez to become the
next Secretary of Housing and Urban Development. I believe he is yet
another outstanding selection for President-elect Bush's cabinet. I
hope that the Committee will quickly report his nomination to the
Senate floor.
Mr. Martinez has overcome many personal hardships to come to this
point. In 1962, at the age of 15, Mr. Martinez was forced to leave his
family and flee the tyranny of Castro's Cuba. He was able to survive
because of the generosity of this great Nation and the people of
central Florida. Four years later, he was reunited with his family and
began to work to achieve his version of the American dream.
He graduated from Florida State University College of Law, and then
went on to build a successful law practice. He then decided to give
back to the community that had given so much to him by becoming
involved in public service and many charitable causes.
Managing the Department of Housing and Urban Development is a
daunting task, but I believe that Mr. Martinez is up to that task. I
believe he will promote home ownership and help more and more Americans
achieve the American dream. I also hope he will be able to streamline
HUD and make it more responsive to its clients, while cleaning out some
of the political cronyism we have seen there.
I once again applaud you, Mr. Chairman, for holding this hearing. I
believe Mr. Martinez is highly qualified to run HUD. I strongly believe
his background, his experience and his management skills will make him
an outstanding HUD secretary.
Thank you Mr. Chairman.
----------
PREPARED STATEMENT OF SENATOR JOHN ENSIGN
Mr. Martinez, please allow me to offer my congratulations on your
nomination to the position of Secretary of Housing and Urban
Development. Like my colleagues, I expect a quick confirmation process
and I look forward to working with you and President Bush. I do not
have any questions for you, but I do have a couple of
Nevada-specific topics I would like to mention for your consideration.
The results of the 2000 Census indicate that Nevada was the fastest
growing State in the United States these past 10 years. While this is
no surprise to anyone, Nevada will again likely outpace the other 49
States in growth over the next 10 years. Because of this rapid growth,
Nevada is at a disadvantage when it comes to the distribution of
Federal formula funds that are based on population and/or poverty
statistics. While in the next fiscal year Nevada will realize and
increase in Federal formula funds due to the new 2000 Census figures,
one of my priorities is to ensure that the population data used by
Federal agencies is updated annually so that Federal formula funds
follow population trends. This is very important to
Nevada and my constituents. I hope to work with you to ensure that
Nevada and other fast growing States receive their fair share of
formula funds administered by HUD, particularly those funds from the
CDBG and HOME programs.
I anticipate that in the coming year the Southern Nevada Enterprise
Community will seek to upgrade its status from that of an Enterprise
Community to an Enterprise Zone or a Renewal Community. The upgrade is
a high priority for the City of North Las Vegas, the City of Las Vegas,
and Clark County. I am very supportive of the Southern Nevada
Enterprise Community and the progress that has been made since 1994.
There is much more that can be accomplished in southern Nevada through
the tax incentives offered through the Enterprise Zone and Renewal
Community Initiatives. I am pleased that you will have broad discretion
to set the criteria for the Renewal Communities and hope you will
consider my input on the Renewal Communities as you develop the
criteria.
Again, Mr. Martinez, congratulations on achieving such a high
honor. I look forward to meeting with you soon and extend the
invitation to visit my home State of Nevada in the near future. A visit
would be heartily welcomed by my constituents in Nevada.
----------
PREPARED STATEMENT OF MEL MARTINEZ
Secretary-Designate of the
U.S. Department of Housing and Urban Development
January 17, 2001
Mr. Chairman, Senator Gramm, and distinguished Members of the
Committee, thank you for the opportunity to appear before you today.
And thank you Senators Graham and Nelson, for your kind introductions.
Let me begin by expressing my profound gratitude to President-elect
Bush for his friendship and his confidence in asking me to be a part of
his Administration. I am humbled and honored to be nominated by
President-elect Bush as Secretary of Housing and Urban Development.
With your indulgence, Mr. Chairman, I would like to introduce my
wife Kitty and our three children, Lauren, John, and Andrew. It is with
their love and support that, if confirmed, I will find the strength to
undertake this important responsibility.
Mr. Chairman, I come before this Committee with a strong set of
beliefs that were shaped by my life of living the American dream. I
arrived in this country as a teenage refugee from Cuba with nothing but
faith in God and myself, and the conviction that America, like nowhere
else in the world, was a place where hard work and a life of principle
would be rewarded.
I spent my first days in America in a government refugee camp, and
I have seen and experienced hardship firsthand. But I also know how
desperately those living in hardship just want the chance, the
opportunity, to build a better life. And I know the compassion and
charity of the American people--people like Walter and Eileen Young and
June and the late Jim Berkmeyer, who volunteered through their churches
to provide places for me to call home for 4 years until my family was
reunited here in freedom.
Throughout my life, I have witnessed the greatness of America, and
the genuine goodness of the American people. In my public life, I
strive for inclusion and the elevation of ideals over politics. As a
new member of the Orlando Housing Authority, I pushed for the rights of
public housing tenants to be part of Authority board meetings, more
than a decade before the implementation of a similar Federal
requirement. As Authority Chairman, I pushed for 5, long years for the
construction of new affordable housing facilities financed by Authority
investments for elderly and single mother low-income households.
For the last 2 years, I have been the elected Chief Executive of
Orange County, FL, one of the fastest growing large metropolitan areas
in the country. As Chairman, I was confronted with overcrowded schools,
crime and drug abuse, a growing senior citizen population, traffic
congestion, mass transit challenges, and the need to make additional
commitments to preserving environmental lands. And what we pledged we
would do, we were able to accomplish, even in the short 2 years that I
served. Sometimes it was not the most politically expedient thing to
do, sometimes the vested special interests did not like what we did,
but in the end, for our community, it was the right thing to do.
From each position, I bring an important perspective as a consumer
of HUD programs, both in public housing administration as well as dealing
with community development and housing block grant programs at the local
level. So I take this next step in my life with the experience of managing
a county government staff of over 6,000, and representing 860,000 of my
fellow Floridians, but most importantly, with what I hope is a strength of
character defined by my past and demonstrated by my deeds.
With the Senate's approval, I will take up housing and community
development challenges in America. Over the last few weeks I have met
with many Members of this Committee, and I look forward to meeting with
many more of you in the weeks to come.
I have also met with the United States Comptroller General, and
spent several hours with him and his staff discussing the issues
surrounding the Department of Housing and Urban Development. I have
been nominated to lead an agency that has been chronically designated
as high risk. And while there have been some areas of improvement,
during my stewardship of this office, significant program areas of high
risk remain to be addressed.
My first priority will be for HUD to continue to put its own house
in order, so we have the institutional fortitude to provide the housing
and community renewal opportunities needed by so many families and so
many neighborhoods. The Department of Housing and Urban Development
must be healthy itself, if we are to deal with the challenges before
us. While former HUD Secretaries Kemp, Cisneros, and Cuomo have built a
foundation for strength, there are a great many areas of institutional
weakness that must be addressed. GAO and the HUD Office of Inspector
General have identified similar program and management areas needing
the most improvement, including: the Federal Housing Administration's
single family mortgage insurance risk; the impact and continuing
evolution of HUD's 2020 management reform effort; and the failure to
integrate financial and information systems. With Senate confirmation,
I will make addressing each of these issues a high priority as
Secretary of Housing and Urban Development.
But HUD's management challenges do not mean that we will shrink
from the housing and community renewal challenges integral to HUD's
core mission. Part of putting compassionate conservatism into action
means using resources efficiently, so there is the means to treat with
compassion those in need.
There are a great many families and communities in need of
opportunity. HUD has found that the number of Americans with worst case
housing needs is growing. And at the same time, HUD's inventory of
affordable housing is shrinking. Despite spending over $10 billion on
homelessness over the last 10 years, too many still live life on the
streets. America is also growing older as the sons and daughters of the
greatest generation age into retirement years. Our grandparents and our
parents helped build this country's greatness and deserve the peace of
mind to know that they will be taken care of, and can live in safe and
decent homes and neighborhoods. And despite record high levels of
homeownership, African-American and Hispanic American homeownership
rates remain below 50 percent. That is not acceptable, and it is
something I intend to address. Unless we make sure that everyone is
participating in this great economic expansion and until we ensure that
barriers to homeownership are torn down for everyone, until then, our
job is not done.
In recognition of these challenges, during his campaign, President-
elect Bush proposed ``the New Prosperity Initiative,'' to expand
homeownership opportunities to low-income families and renew distressed
areas in communities across the country. Just a month ago, with this
Committee's help, Congress enacted one of President-elect Bush's
proposals, allowing low-income families and individuals with
disabilities to use Section 8 rental vouchers toward homeownership. I
pledge to you the timely implementation of these important initiatives.
The President-elect also proposed the creation of more than 1
million Individual Development Accounts by providing tax credits to
financial institutions that match the savings of low-income earners,
who can withdraw the matched funds tax free to finance a home, a
business or education. Obtaining downpayment and closing costs, in most
cases, is the primary barrier low-income families face when trying to
buy a home. To address this problem, President-elect Bush has pledged
to establish the ``American Dream Down Payment Fund'' to provide $1
billion of matching grants to lenders over 5 years to help as many as
650,000 unassisted low-income families become homeowners. To increase
the supply of affordable housing and rid communities of vacant
properties, the President-elect has proposed $1.7 billion over the next
5 years in investor-based tax credits to encourage the construction and
rehabilitation of single family homes in distressed communities. If
confirmed, I look forward to working with this Committee on many
aspects of these initiatives.
Finally, the issues relating to how we grow and develop as
communities must be part of our discussions during the next few years.
If confirmed, I intend to initiate a national dialogue on the
challenges of growth and its impact on quality of life issues. These
are issues of importance and deserve careful study and consideration.
In every community, from inner city Chicago, to the West's Silicon
Valley corridors, from the Orlando suburbs, to the rural Iowa
community, the opportunity need is great. It is over the next several
weeks that, if confirmed, I will explore how to meet this opportunity
need, to see where we should be going with housing and community
renewal policy. A key part of this process will be continuing
discussions with Members of this Committee, to learn from your
experience, to better understand what the issues are that we will be
confronting together as partners. We will be partners, and I look
forward to a very close relationship with Congress and this Committee.
In addition, as a former local government official, I expect to
work closely with our partners at the grassroots level, from mayors,
local officials and governors, to non-profit and faith-based
organizations, housing advocate and industry groups. Together, we can
meet the challenges of housing affordability, availability, and
community renewal so that all people can truly achieve the American
Dream.
I am a living testament to the promise of America. It is our
responsibility to help fulfill the promise of America for people from
all walks of life, throughout this great country. I came to America
with a suitcase and the hope of a better life. I know the value of
homeownership because I have witnessed its great power throughout my
entire life.
I can still remember the pride my dad and mom had when they bought
their first home in America with the help of FHA. It seems like
yesterday that Kitty and I bought our first home, the home where we
have raised our children and where we lived life as part of a
community.
Owning your own home is the American Dream, and I intend to fight
for those who do not yet own a home, so they can live the American
Dream and experience the transformation that can happen in a life
through homeownership.
Mr. Chairman, Senator Gramm, Members of this Committee, we have
much work to do. The Department of Housing and Urban Development must
continue to evolve into a more efficient and more effective
institution. At the same time, for low-income families and distressed
communities across the country, the opportunity need is great. Working
as partners, I am confident that we can meet these challenges together.
If confirmed, I will work in a bipartisan manner, working with
Republicans and Democrats to advance our common goals. It is my belief
that our mission at HUD is not a Republican or Democrat mission, but
rather an American mission and with your help we can and we will
succeed.
RESPONSE TO WRITTEN QUESTIONS OF SENATOR SARBANES FROM MEL
MARTINEZ
Q.1. As you know from your experience in Florida, we will face
a huge challenge in meeting the affordable housing needs of our
elderly population. The Census Bureau estimates that there will
be a 55 percent increase in the number of elderly people (65
and older) to 58 million people by the year 2020. As of 1998,
there were already over eight people waiting for every
available unit of elderly housing. What ideas do you have as to
how the Federal Government can help meet this growing need?
A.1. As I stated in my opening remarks ``America is also
growing older as the sons and daughters of the greatest
generation age into retirement years. Our grandparents and our
parents helped build this country's greatness and deserve the
peace of mind to know that they will be taken care of, and can
live in safe and decent homes and neighborhoods.'' I believe we
as a country must col-
lectively ask ourselves how will we meet the housing needs of
America's aging population. To this end, I commend the previous
Congress, and in particular this Committee for creating the
``Commission on Affordable Housing and Health Care Facility
Needs of Senior Citizens in the 21st Century''. As you know,
the Seniors Commission was formed recognizing the growing
numbers of Americans over 65 years of age, and the need to
develop comprehensive aging-in-place strategies that link
affordable shelter with compassionate services through public-
private partnerships. I believe we already have one exemplary
public-private partnership at HUD and that is the Section 202
Supportive Housing Program for the Elderly. Also, I commend you
and the previous Congress for making reforms to this program to
allow the conversion of certain units to assisted living units.
However, as we look to the future more has to be done and our
country must be prepared. I look forward to working closely
with the Congress and the Congressional Seniors Commission to
work on these issues together.
Q.2. The single-family FHA program has been one of the most
important contributors to the increase in the homeownership
rate, particularly among the first time and minority
homebuyers. That is part of the reason, along with the strong
economy, that we have reached historic levels of homeownership.
FHA has a strong, bipartisan base of support. In 1998, the
Congress raised the FHA loan limits, again, with strong
bipartisan support, in order to make the program more useful in
high cost areas. From time to time, efforts are made to
undermine FHA by means-testing it, thereby making it
unavailable to middle class Americans, or by creating extra
paperwork or other burdens to put FHA at a disadvantage.
Will you maintain the FHA program as a viable and
cost-effective choice for American homebuyers?
Will you resist efforts to narrow the program, raise
barriers to its use, or reduce its availability to a wide
range of American homebuyers?
A.2. Senator, I agree with you that FHA has been one of the
most effective Federal programs that has helped millions of
American families achieve the American Dream of Homeownership.
The mortgage finance industry is the engine that generates
capital to build and own homes and apartments and is the
primary vehicle for translating the products and services of
HUD to consumers in the homeownership marketplace. I pledge to
continue HUD's partnership with the mortgage finance industry.
Q.3. You have clearly made a name for yourself nationally by
your effort in Orange County to stop urban sprawl and
controlled growth. With the Nation's population expected to
grow 50 percent in the next 50 years, America's communities
face the challenges of planning for and managing growth.
(a) Do you see a role for HUD in helping communities plan
for and manage growth?
(b) There have been concerns raised that the kind of strong
growth limits you have enforced could have a negative impact on
affordable housing. How do you respond to these concerns?
(c) Do you support Federal efforts to provide resources to
encourage regional planning to address needs such as housing
affordability and transportation, such as is provided in the
HUD Regional Connections Initiative?
Q.3a. Do you see a role for HUD in helping communities plan for
and manage growth?
A.3a. Managing growth and development is primarily a local
issue, and the Federal Government should have no role in making
land use and growth management decisions. However, we have seen
that many localities have been unprepared for growth and are
grappling with ways to meet the demands created by growth, such
as traffic congestion, loss of open space, and overcrowded
schools. And having been unprepared for growth, some localities
adopt measures that can unduly restrict the production of
needed housing or permit only expensive housing. HUD could play
a useful role in providing localities with technical assistance
and technical grants to increase their planning capabilities so
they won't find themselves surprised by growth and unprepared
for it; but there should be no mandates to follow any Federal
planning prescriptions. HUD could also be a clearinghouse for
making better known the ``best practices'' that communities
have created for planning for growth. It is from the local
level that the ideas will come, but HUD can play a role in
assisting communities build a capacity for planning and
consensus building.
Q.3b. There have been concerns raised that the kind of strong
growth limits you have enforced could have a negative impact on
affordable housing. How do you respond to these concerns?
A.3b. I share these concerns that restricting growth can have
an impact on the cost of housing, and we need more affordable
housing built. But communities are also rightly concerned about
protecting the qualities of their neighborhoods that attracted
them there in the first place. There are good reasons for
managing growth in order to maintain good schools with
reasonable class sizes, preserve some open spaces, and protect
sensitive natural environments. What each community must
determine is how to find a balanced approach that protects the
quality of life without stopping new housing construction.
Managing growth does not mean stopping growth. In Orange
County, there was no housing moratorium. We responded on a
case-by-case basis to respond to a school crisis situation.
While many suburban areas are having a difficult time
dealing with rapid growth, there are great opportunities to
provide new affordable housing in older areas of our towns and
cities that have unused capacity of roads, parks, and schools.
Producing new housing in older neighborhoods is one approach
that could help meet the demand for affordable housing.
Q.3c. Do you support Federal efforts to provide resources to
encourage regional planning to address needs such as housing
affordability and transportation, such as is provided in the
HUD Regional Connections Initiative?
A.3c. As our metropolitan areas grow, some of the challenges of
growth and development can best be addressed from a regional
perspective. Yet local governments are most responsive to
citizen needs, and the power to regulate land use through
zoning and other measures should remain with local governments.
That being said, the Federal Government can be a valuable
partner in providing expertise and resources to encourage
partnerships between city and suburban governments to address
issues such as roads, mass transit, and the need for affordable
housing throughout a metropolitan area.
Q.4. A spatial mismatch has developed between the location of
most entry-level jobs and the location of most affordable
housing where new job entrants are likely to live.
Specifically, while two-thirds of all new jobs are located in
the suburbs, three-quarters of welfare recipients live in the
central cities and rural areas. Several Federal agencies are
developing strategies to bridge this gap. For example, the
Department of Transportation administers the Job Access and
Reverse Commute program, which provides grants to transit
providers to support increased public transportation services
for those leaving welfare or those facing reverse commuters
(i.e. commutes from central city to suburban locations). Grant
recipients under this program work cooperatively with human
services agencies, employers, and State and local governments
to improve access to top jobs for low-income families.
As Secretary of HUD, would you be supportive of this
and similar programs designed to address the spatial
mismatch between the location of affordable housing and the
increasingly suburban growth.
A.4. I certainly recognize the spatial mismatch problem that is
confronting many welfare recipients and former recipients as
they strive to establish themselves in the ranks of the
American workforce. I believe that HUD, like other Federal
Government agencies, should work to remove barriers that
prevent these citizens from finding and holding jobs. Congress
indicated its concern when it approved incremental vouchers for
a welfare-to-work voucher program. I plan to look closely at
how those vouchers have been utilized and how effective that
program has been. I will also look at other possible
initiatives.
Q.5. What will your top priorities be as Secretary of the
Department of Housing and Urban Development?
A.5. One of my highest priorities will be a thorough review of
HUD's current management structure to ensure that resources and
staff are connected to mission and outcomes.
Based on discussions with Members of this Committee and
GAO, I believe there are some areas where HUD 2020 has
strengthened the Department, and at the same time there are
areas where HUD 2020 has perhaps not been as successful.
I will also focus on the upcoming budget. I will work to
ensure that HUD's current budget and its programs are properly
managed so that vulnerable populations--seniors and persons
with disabilities, homeless, and low-income families--can be
adequately served with existing resources.
RESPONSE TO WRITTEN QUESTIONS OF SENATOR DODD FROM MEL MARTINEZ
Q.1. Do you plan to continue physical inspections? Do you have
any thoughts on how to improve the inspection process?
A.1. Based on my GAO briefing, I believe HUD's oversight of
public housing has consistently progressed under former
Secretaries Kemp, Cisneros, and Cuomo. A key element of HUD
2020 was to centralize assessment of all HUD housing into a
single, state-of-the-art organization with the creation of the
new Real Estate Assessment Center. I believe on the surface
this is a proper initiative for HUD to take--HUD should have a
system for inspecting its investments. As I understand it, the
Public Housing Assessment System (PHAS) was required by the
public housing reform legislation, which this Committee should
be commended for. However, I do understand that the new system
is producing subjective and sometimes arbitrary results. I have
been briefed on these problems and I will direct early
attention to evaluate PHAS effectiveness and consider extending
PHAS compliance waivers if appropriate.
Q.2a. A significant part of the ongoing effort to reform public
housing is embodied in the HOPE VI program, which has helped
finance the demolition of some of the most dilapidated public
housing and its replacement with mixed-income housing. Are you
familiar with this program? What is your view of the program?
A.2a. I believe the concept behind the HOPE VI program is
sound, however, I do understand that the concern with the
program has been the perceived excessive per unit cost. HOPE VI
funds are used for demolition of existing units, site
remediation, and construction of new public housing units. As a
result, when the total cost for a HOPE VI project are divided
by the number of new units which resulted, the total
development costs (TDC's) what it would cost to purchase a
single-family home in these areas. The Baltimore Sun ran a
series of articles criticizing the per unit costs of a HOPE VI
development in Baltimore. As a result, Members of Congress
expressed concerns with the HOPE VI program from a cost
standpoint.
In order to address the cost issue, the public housing
reform act amended the statutory definition of ``development
cost'' to exclude the costs associated with demolition of or
remediation of environmental hazards associated with public
housing units that will not be replaced at the project site.
The program expires at the end of this fiscal year. I expect
that the Administration will engage in constructive discussions
with the Congress on the experience of the program to date.
Q.2b. Over the past several years, HUD and the Congress have
worked together to fund an increase in the number of new
housing vouchers. Will you continue to advocate for increased
budgets for HUD within the new Bush Administration in order to
meet the great need for affordable housing?
Q.2c. Will you work to ensure full funding for the public
housing program, which serves extremely low-income families,
and high percentages of children and the elderly?
A.2b&c. With regard to funding increases for housing vouchers
and full funding for the public housing program, I have not
studied the full magnitude of the HUD budget, and look forward
to those deliberations.
Q.3. Can you share your thoughts about how housing policies
might be developed to improve the way we work with senior
citizens?
A.3. As I stated in my opening remarks ``America is also
growing older as the sons and daughters of the greatest
generation age into retirement years. Our grandparents and our parents
helped build this country's greatness and deserve the peace of mind to
know that they will be taken care of, and can live in safe and
decent homes and neighborhoods.'' I believe we as a country
must collectively ask ourselves how will we meet the housing needs
of America's aging population. To this end, I commend the previous
Congress, and in particular this Committee for creating the
``Commission on Affordable Housing and Health Care Facility
Needs of Senior Citizens in the 21st Century''. As you know,
the Seniors Commission was formed recognizing the growing
numbers of Americans over 65 years of age, and the need to
develop comprehensive aging-in-place strategies that link
affordable shelter with compassionate services through public-
private partnerships. I believe we already have one exemplary
public-private partnership at HUD and that is the Section 202
Supportive Housing Program for the Elderly. Also, I commend you
and the previous Congress for making reforms to this program to
allow the conversion of certain units to assisted living units.
However, as we look to the future more has to be done and our
country must be prepared. I look forward to working closely
with the Congress and the Seniors Commission to work on these
issues together.
RESPONSE TO WRITTEN QUESTIONS OF SENATOR BENNETT FROM MEL
MARTINEZ
Q.1. Mr. Secretary, I know I speak for everyone in the desire
to see home ownership expand to 70 percent of all Americans and
particularly to increase homeownership for minorities. How can
FHA work in tandem with the private sector to achieve this
goal, and are you willing to explore such public-private
partnerships to help us achieve this goal?
A.1. FHA has been one of the most effective Federal programs
and has helped millions of American families achieve the
American Dream of Homeownership. The mortgage finance industry
is the engine that generates capital to build and own homes and
apartments and is the primary vehicle for translating the
products and services of HUD to consumers in the homeownership
marketplace. I expect to continue HUD's partnership with the
mortgage finance industry.
Q.2. Mr. Secretary, what is the best way to draw on the
expertise of the private sector and leverage your objective at
HUD to achieve the greatest effectiveness?
A.2. I understand that on the multifamily side, FHA has
experience with risk sharing arrangements. I also understand
that FHA has been working with our private sector finance
partners to develop single-family risk sharing arrangements. If
confirmed, I will see that these discussions continue with the
private sector to develop single-family risk sharing approaches
that benefit the American consumer and provide financial
stability to the FHA fund.
Q.3. Mr. Secretary, in light of the current environment are you
going to evaluate the impact of an economic downturn on the FHA
funds, both single-family and multifamily? A recent article
indicates that the single-family fund may have some problems
due to a premium cut that was just implemented. We must make
sure the FHA fund remains strong.
A.3. I agree with you that the FHA fund must remain strong. It
must remain strong to benefit prospective American homebuyers.
As I said in my opening statement, I will wait to review the
pending GAO study, which will report on FHA's capital adequacy
under various economic conditions. I understand this report is
due to be released next month.
Q.4. Mr. Secretary, Ginnie Mae is one of the most successful
parts of the Department. Have you given thought to ways in
which Ginnie Mae could expand what it purchases to increase
homeownership opportunities?
A.4. I agree that Ginnie Mae is an important part of the
housing mosaic, which brings needed capital back into the
government-assisted mortgage markets. I have not given any
specific thought into ways to expand Ginnie Mae, but if it is
beneficial to the American homebuyer and if it meets a need
that is not being met by our private sector partners, it is an
approach I am willing to examine.
RESPONSE TO WRITTEN QUESTIONS OF SENATOR SHELBY FROM MEL
MARTINEZ
Q.1. Mr. Martinez, one of the most challenging aspects of the
job of a cabinet level secretary is setting priorities for the
agency. I have a strong concern regarding the level of
attention that the Department of Housing and Urban Development
pays to our Nation's rural areas. It is very important to me to
know that you will pay significant attention and dedicate
resources to the problems and concerns regarding the lack of
housing and development in rural America. What are your views
regarding this situation? Will the Department, under your
leadership, undertake efforts to sufficiently include rural
America in its mission?
A.1. If confirmed, housing and community development in rural
areas as coordinated with the Department of Agriculture's Rural
Housing Service will be a key component of HUD's mission under
my stewardship. According to HUD's Worst Case Housing Needs
report released in March 2000, 32 percent of very low-income
non-metropolitan renters suffered from worst case housing
needs, and 54 percent of extremely low-income non-metropolitan
renters suffered similar needs. At the same time, between 1991
and 1997, the number of housing units in non-metropolitan areas
affordable to extremely low-income renters declined by 5
percent. Although not under HUD's jurisdiction, affordability
contracts with Rural Housing Service housing developments are
beginning to expire and presents the Department of Agriculture
(DOA) with a problem similar to HUD's recent Section 8 ``opt-
out'' challenge. I expect to work with DOA on this issue to
offer any assistance the Department may appropriately provide.
Q.2. Last year, I sponsored legislation to modernize the
requirements under the National Manufactured Housing
Construction and Safety Standards Act of 1974 because I believe
that manufactured housing presents one of the most viable means
to address our Nation's affordable housing issues. This bill
has been signed into law. In as much, as the Secretary of
Housing and Urban Development, the ball would now be in your
court. It is my hope that you would dedicate the necessary time
and resources to moving forward with implementation of the new
law. Please advise me regarding your views concerning this
matter.
A.2. If confirmed, one of earliest priorities as Secretary will
be the implementation of provisions included in the recently
enacted ``American Homeownership and Economic Opportunity
Act.'' Included in the law are provisions designed to modernize
the requirements under the National Manufactured Housing
Construction and Safety Standards Act of 1974. As you well
know, manufactured housing contributes more than $30 billion
annually to our Nation's economy and produces nearly one in
four single-family homes sold each year. I understand that this
particular legislation was under consideration for nearly 8
years. The Committee should be commended for its role in moving
forward with this important initiative, which was strongly
supported by the industry as well as the major consumer groups
including AARP. I expect to move forward with implementation of
these provisions as soon as is possible.
Q.3. Due in large part to a thriving economy, the national home
ownership rate, reached an all-time peak of 67.1 percent in the
first quarter of 2000. However, the recent growth in home
ownership still leaves many age groups below their peak home
ownership rates of the late 1970's and early 1980's. One cause
is the diminishment of housing affordability over the last 25
years. A large part of the blame for such lack of affordability
must be placed on burdensome regulations and their unnecessary
costs, which end up being paid by home buyers.
During the 106th Congress, legislation was passed, and
ultimately signed into law, which began to address the problem
of regulatory barriers to housing affordability, but there is
more work to be done. One provision, that ultimately was not
included in the final housing bill, would have required a
housing impact analysis before the implementation of any new
Federal regulation to determine whether the regulation would
have a significant negative impact on the cost and availability
of housing. If a proposed rule would have such an impact, then
an opportunity would be given to other groups to offer an
alternative that would achieve the stated objective of the
regulation, with less of an adverse impact on housing
affordability.
Would you support and encourage the development and im-
plementation of such an analysis to help assure that housing is
affordable to all? What are your specific views on the issue of
affordable housing? How will you work to assure that burdensome
regulations do not hinder the ability for Americans to afford
safe, decent housing?
A.3. As a former county official, I am aware of the burdens
that multiple layers of regulations can place on housing
affordability. If confirmed, it is an issue I will carefully
consider, to ensure that we do not stifle affordable
homeownership, but at the same time we are providing necessary
protections to the consumer. I look forward to working with
Congress on the issue of a housing impact analysis requirement
to encourage affordable housing and provide more Americans with
the opportunity to afford decent, safe housing.
RESPONSE TO WRITTEN QUESTIONS OF SENATOR REED
FROM MEL MARTINEZ
Q.1. Will you continue to support implementation of HUD's new
lead-safe housing regulation, promulgated on September 15,
2000, which creates steps for removing lead-based paint hazards
from federally owned and assisted housing?
A.1. According to Department statistics, more than 800,000
children younger than 6 years old living in the United States
have lead levels in their blood above the level of concern set
by the Centers for Disease Control and Prevention. Many of
these children are in families of low-income and are living in
old homes with heavy concentrations of lead-based paint. As a
father of three, the issue of lead-safe housing is of
particular importance to me. If confirmed, I intend to
carefully review the new regulations to ensure they are the
most effective means to provide lead-safe housing, and at
present have no plans to reverse the rule's implementation.
Q.2. What should be the goals of Freddie Mac and Fannie Mae,
and are we measuring there progress effectively?
A.2. As you know, HUD recently published affordable housing
goals for Fannie Mae and Freddie Mac. I have not reviewed this
regulation and as such I have no opinion as to what the proper
goals should be or whether HUD is measuring their progress
effectively at this time. However, I assure you I will place a
high priority on HUD's oversight of the housing-related GSE's.
Q.3. As you note in your statement, despite spending over $10
billion on homelessness over the last 10 years, too many still
live life on the streets. Is homelessness growing because the
homelessness system is ineffective? Actually, it appears that
through HUD's Continuum of Care process, much progress has been
made and the vast majority of people who become homeless exit
the system relatively quickly and do not return. On the other
hand, mainstream programs that can prevent and end homelessness
like welfare, health care, mental health care, substance abuse
treatment, veterans assistance, appear to be failing and
shifting the cost and responsibility for helping the most
vulnerable people to the homeless assistance system.
If such cost shifting is going on, how could you as HUD
Secretary help reverse this cost-shifting and help refocus
mainstream programs on preventing homelessness from occurring
in the first place?
A.3. The most important role HUD should play on the issue of
homelessness is one of bricks and mortar, by providing
permanent housing solutions to those without homes. If
confirmed, I expect to work closely with the Department of
Health and Human Services and other agencies on the social
service side of the homeless challenge, including mechanisms to
prevent homelessness in the first place.
Q.4. What plans do you plan to undertake as Secretary to
establish a Federal housing policy for people with disabilities
with extremely low incomes, especially people who rely on
Supplemental Security Income (SSI) as their sole source of
monthly income?
A.4. According to statistics compiled by the Consortium for
Citizens with Disabilities (CCD) and the Technical Assistance
Collaborative Inc., individuals with disabilities receiving SSI
benefits must pay, on a national average, 98 percent of their
SSI income in order to be able to rent a modest one-bedroom
apartment at HUD's Fair Market Rent. In addition, the CCD Task
Force has estimated that at least 1.8 million non-elderly adult
SSI recipients may have worst case housing needs. Clearly,
there is great need for affordable housing for individuals with
disabilities across the country. If confirmed, I intend to work
closely with housing for individuals with disabilities advocacy
groups and Congress to develop a comprehensive strategy for
housing individuals with disabilities with compassion, and in
recognition of their oftentimes unique housing needs.
Q.5. Section 8 vouchers, while very important, cannot be the
sole response to the housing crisis facing people with
disabilities. Expanded housing production targeted to people
with disabilities is also needed to 10 create housing with
accessible features; 20 limit reliance on private landlords who
frequently discriminated against people with disabilities; and
30 create a permanent supply of non-profit owned rental housing
available to people with disabilities.
At the present time, very little housing is being developed
for people with disabilities. For example, Section 811
Supportive Housing for Persons with Disabilities program funded
only 1,600 units of housing last year--less than half the
number during the last year of the previous Bush
Administration. People with disabilities have also not faired
well with respect to other Federal housing production programs.
An unpublished HUD report (authored by Abt Associates)
documents that people with disabilities rarely benefit from the
HOME, Community Development Block Grant or Federal Low Income
Housing Tax Credit financed projects. Further, on the demand
side, this need for production is expected to increase as
States move forward in transitioning individuals from
institutions into the community consistent with the LC v.
Olmstead decision of the Supreme Court.
What efforts will HUD take under your leadership to
increase Federal support for production of permanent housing
very low-income people with disabilities?
A.5. If confirmed, I expect to fully support HUD's Section 811
supportive Housing for Persons with Disabilities as well as
work closely with housing for individuals with disabilities
advocacy groups and Congress to develop a comprehensive
strategy for housing individuals with disabilities with
compassion, and in recognition of their oftentimes unique
housing needs.
Q.6. What efforts will you take as HUD Secretary to ensure that
HUD ``mainstream'' programs such as HOME and CDBG are better
focused on extremely low-income people with severe disabilities
to ensure that all programs are made truly ``affordable'' to
people with incomes below 20 percent of median? What guidance
can HUD give to agencies responsible for compiling local
consolidated plans to ensure that the disability community is
more actively involved in the process of directing HUD
resources at the local level?
A.6. As a former county official, I have first hand experience
with HUD programs like CDBG and the HOME program, as well as
dealing with the local consolidated plan process. If confirmed,
I expect to work with community-based advocacy groups on ways
housing and community development block grant funds can more
effectively provide opportunities for individuals with
disabilities. In addition, I expect to work to ensure that the
disability community has a voice in the local planning process
so that underserved populations have affordable housing
opportunities.
Q.7. HUD is responsible for ensuring compliance in its programs
with the Fair Housing Act Amendments of 1988 and Section 504 of
the Rehabilitation Act of 1973--including the removal of all
barriers and impediments which impact people with disabilities
accessing affordable housing programs. In the past, HUD has
been slow to ensure that people with disabilities are not being
discriminated against when public housing agencies and private
owners of HUD assisted housing seek to restrict occupancy to
households age 62 and older. What measures do you feel are
needed at HUD to promote leadership in ensuring full compliance
and enforcement of the accessibility provisions of the Fair
Housing Act Amendments of 1998. Do you support training and
technical assistance for the disability community regarding the
reasonable accommodation and reasonable modifications
provisions of the Fair Housing Act and Section 504 of the
Rehabilitation Act?
A.7. As Secretary of HUD, if confirmed, I will work to ensure
compliance with the Fair Housing Act. Training and education
programs for community-based groups, including non-profit
organizations, could be an important mechanism for reducing
housing discrimination for individuals with disabilities, and
it is a tool I will carefully consider.
RESPONSE TO WRITTEN QUESTIONS OF
SENATOR DEBBIE STABENOW FROM MEL MARTINEZ
Q.1. I wanted to ask you about the housing challenge that we
are facing with our seniors. With the upcoming retirement of
the baby boom, there will be tremendous needs for a diverse
housing stock for many of our seniors who are on fixed incomes.
Regrettably, the programs designed to help seniors with
affordable housing have declined 48 percent in real terms over
the last 6 years. Will this program and others that help
seniors be a priority for you as you advocate for HUD's
priorities in Congress?
A.1. As I stated in my opening remarks ``America is also
growing older as the sons and daughters of the greatest
generation age into retirement years. Our grandparents and our parents
helped build this country's greatness and deserve the peace of mind to
know that they will be taken care of, and can live in safe and
decent homes and neighborhoods.'' I believe we as a country
must collectively ask ourselves how will we meet the housing needs
of America's aging population. To this end, I commend the previous
Congress, and in particular this Committee for creating the
``Commission on Affordable Housing and Health Care Facility
Needs of Senior Citizens in the 21st Century''. As you know,
the Seniors Commission was formed recognizing the growing
numbers of Americans over 65 years of age, and the need to
develop comprehensive aging-in-place strategies that link
affordable shelter with compassionate services through public-
private partnerships. I believe we already have one exemplary
public-private partnership at HUD and that is the Section 202
Supportive Housing Program for the Elderly. Also, I commend you
and the previous Congress for making reforms to this program to
allow the conversion of certain units to assisted living units.
However, as we look to the future more has to be done and our
country must be prepared. I look forward to working closely
with the Congress and the Congressional Seniors Commission to
work on these issues together.
Q.2. I am sure you are familiar with the Enterprise Zones
program at HUD. I was pleased that Detroit was selected as an
Enterprise Zone in the first round in 1994. Unfortunately, in
the latest round, the City of Flint was not selected as an
Enterprise Zone, even though they put together a solid
proposal. It had to settle for an Enterprise Community
designation. Many of our Enterprise Zones have made great
progress in economic revitalization. But many more communities
want the same chance. Cities like Flint desperately need major
assistance. As you may know, Buick City recently closed in
Flint costing the city 3,000 jobs. Would you be willing to
consider supporting a new round of Enterprise Zones that give
cities like Flint hope for the future.
A.2. The Community Renewal Tax Relief Act of 2000 enacted last
year creates a Round III competition for the Empowerment Zone
initiative. Round III includes the designation of 9 new
Empowerment Zones, and 40 new ``Renewal Communities.'' Renewal
Communities provide pro-growth tax benefits and regulatory
relief including zero capital gains rate on sales of assets
held for more than 5 years, increases expensing for small
businesses, a 15 percent employment wage credit for each worker
and commercial revitalization reductions for taxpayers who
rehabilitate or revitalize buildings in the designated area.
Congress has stipulated that the rule governing the
competitions must be issued by April 15, 2001.
Q.3. There are 750,000 homeless people in the United States on
any given night. The most recent research shows that as many as
3.5 million Americans may spend some time homeless each year.
Unfortunately, the main program that provides funding for
homelessness prevention, is down 13 percent in real terms over
the last 6 years. Shouldn't we be doing more to fight this
problem?
A.3. As I stated in my opening remarks, despite spending over
$10 billion on homelessness over the last 10 years, too many
still live life on the streets. The most important role HUD
should play on the issue of homelessness is one of bricks and
mortar, by providing permanent housing solutions to those
without homes. If confirmed, I expect to work closely with the
Department of Health and Human Services and other agencies on
the social service side of the homeless challenge, including
mechanisms to prevent homelessness in the first place.
RESPONSE TO WRITTEN QUESTIONS OF
SENATOR JON S. CORZINE FROM MEL MARTINEZ
Q.1. What role do you believe Fannie Mae and Freddie Mac should
play in the promotion of homeownership?
A.1. Fannie Mae and Freddie Mac play an important role in
public/private partnerships that will help expand
homeownership. Secretaries Kemp and Cisneros set the standard
for this type of partnership. For example, Fannie Mae's
commitment to invest a trillion dollars in expanding mortgage
lending to low- and moderate-income borrowers was one piece of
HUD's national effort to raise homeownership in these
populations. Fannie Mae and Freddie Mac also helped support the
policies underpinning the creation of Enterprise Zones.
I believe the GSE's can work with HUD in the following
areas to enhance HUD's mission, including:
Homeownership Vouchers and Tax Credits. Fannie Mae and
Freddie Mac could provide mortgage financing for homes
covered by the voucher and tax credit initiatives included
in the President-elect's campaign platform.
National Summit on Minority Homeownership. The
national homeownership rate is 67 percent, but the minority
homeownership rate is under 50 percent. Fannie Mae and
Freddie Mac
can help convene a national session to construct a policy
agenda
with policymakers, lenders, and local groups across the
political spectrum.
Regulatory Relief. The new housing bill creates a
clearinghouse function at HUD and authorizes a grant
program to fund local partnerships to dismantle local
regulatory barriers. Fannie Mae can collaborate with HUD in
setting up the clearinghouse and providing it with examples
from the partnerships it has established across the
country.
Q.2. As you know, debt held by Government Sponsored Enterprises
(GSE's) has grown substantially in recent years. Are you
concerned about this? Do you believe that the existing
mechanisms for overseeing GSE's are sufficient or should they
be strengthened?
A.2. I have not studied the GSE debt issue, and have no
specific opinion at this time. I believe, the important
question is whether the GSE's are achieving the mission
Congress has established for them in a safe and sound manner.
As the mission regulator for Fannie Mae and Freddie Mac,
HUD has responsibility for ensuring that the two companies meet
the affordable housing goals and other statutory requirements
established by Congress. The Office of Federal Housing
Enterprise Oversight (OFHEO), an independent agency within HUD,
is responsible for overseeing the companies' safety and
soundness.
I understand that OFHEO runs a rigorous examination program
focused solely on these two companies, with several times more
examiners than in other Federal bank examination programs. In
every year that OFHEO has reported its exam results to
Congress, Fannie Mae and Freddie Mac have very received the
highest possible marks for safety and soundness. I also
understand that this view of the companies' safety and
soundness is shared by other regulators, including Federal
Reserve Chairman Alan Greenspan, who testified in July 2000
that these companies are ``well-run institutions'' with ``very
good risk management procedures.''
It is also important for any company to be transparent and
subject to market discipline. In October, the two companies
announced with House Capital Markets Subcommittee Chairman
Richard Baker a set of voluntary initiatives to enhance market
discipline and capital. Chairman Baker noted that with these
commitments, the two companies ``exceed any standard for any
domestic or international financial model anywhere.''
Q.3. HUD has established a program to evaluate the physical
condition of public housing, and I believe it important the
housing authorities be held accountable for the quality of the
housing they provide. At the same time, I have heard from
housing authorities in New Jersey who are concerned about the
way the existing assessment program is being implemented, and
believe that it is producing subjective and sometimes arbitrary
results. Would you be willing to take a close look at this
program and consider whether its implementation needs
improvement?
A.3. Based on my GAO briefing, I believe HUD's oversight of
public housing has consistently progressed under former
Secretaries Kemp, Cisneros, and Cuomo. A key element of HUD
2020 was to centralize assessment of all HUD housing into a
single, state-of-the-art organization with the creation of the
new Real Estate Assessment Center. I believe on the surface
this is a proper initiative for HUD to take--HUD should have a
system for inspecting its investment. As I understand it, the
Public Housing Assessment System (PHAS) was required by the
public housing reform legislation, which this Committee should
be commended for. However, I do understand that the new system
is producing subjective and sometimes arbitrary results. I have
been briefed on these problems and I will direct early
attention to evaluate PHAS effectiveness and consider extending
PHAS compliance waivers if appropriate.
Q.4. Public housing residents throughout New Jersey have
benefited from the Public Housing Drug Elimination Program,
which provides funds for improved security, along with a
variety of community-based prevention and treatment
initiatives. The program has enjoyed broad, bipartisan support
in the Congress. Do you support this program? Would you be
willing to consult with me before proposing any significant
changes to the program?
A.4. HUD's Public Housing Drug Elimination Program (PHDEP)
supports a wide variety of efforts by public and Indian housing
authorities to reduce or eliminate drug-related crime in public
housing developments. Based on this core purpose, I certainly
support the program. Knowing the interest of your predecessor,
former Senator Lautenburg, I would certainly be happy to consult with
you before proposing any changes to the program.
Q.5. Do you have any new proposals for addressing the problem
of homelessness?
A.5. I am very aware of past Congressional efforts to
legislatively combine the existing HUD McKinney/Vento Homeless
Assistance programs into a block grant. In fact, last year's
VA/HUD Appropriations report language directed that the
authorizing committees pursue this goal. I pledge to work with
the Congress and build on the successes of the Continuum of
Care initiative and provide a legislative regime, which assures
decentralized local decision making with maximum input from
local non-profit homeless providers.
Q.6. It has been reported that you have opposed an ordinance
that would prohibit discrimination against Orange County
workers on the basis of their sexual orientation. Is this
report accurate and, if so, would you please explain your
opposition to the ordinance. Can you assure the Committee that,
as HUD Secretary, you would oppose any discrimination against
any HUD employee or any other individual on the basis of their
race, gender, ethnic background, national origin or sexual
orientation?
A.6. I did not oppose an ordinance prohibiting discrimination
against Orange County workers on the basis of their sexual
orientation. Orange County has very strong anti-discrimination
policies in the areas of hiring, promotion and other job
opportunities. Additionally, Orange County established a
professional standards office with responsibility for
investigating any complaints regarding discrimination or other
allegations of unfair treatment of employees and citizens. The
office reported directly to the County Administrator's office
and worked closely with the Federal EEO offices to insure
timely resolution of any complaints of discrimination. If
confirmed, as Secretary I will enforce Federal regulations
regarding anti-discrimination against any HUD employee of any
other individual on the basis of race, gender, ethnic
background, national origin or sexual orientation.
RESPONSE TO WRITTEN QUESTIONS OF
SENATOR MIKE CRAPO FROM MEL MARTINEZ
Q.1. As HUD Secretary, you will be in charge of the Office of
Lead Hazard Control. In recent years, Congress has appropriated
millions of dollars to this office to address issues relating
to health problems stemming from exposure to lead-based paint
older U.S. homes. Approximately $100 million has been
appropriated for this office this fiscal year. Questions have
arisen about whether the current programs in place to address
this health problem have been effective in serving their
intended population, particularly children facing the risk of
lead-based paint exposure. In your capacity as the Secretary of
HUD, what are your plans to ensure the Office of Lead Hazard
Control is more successful in dealing with this health problem,
especially in low- and moderate-income housing nationwide? Do
you see community-based, public-private partnerships that focus
efforts on reducing exposure risks as an important part of any
solution?
A.1. According to Department statistics, more than 800,000
children younger than 6 years old living in the United States
have lead levels in their blood above the level of concern set
by the Centers for Disease Control and Prevention. Many of
these children are in families of low-income and are living in
old homes with heavy concentrations of lead-based paint. As a
former county official, if confirmed as Secretary, I would want
to explore moving to a more community-based approach that would
use education, training and lead reduction measures to address
this serious problem. In this way, we can empower community
leaders and local organizations to more effectively educate
people about the dangers posed by lead-based paint and train
local groups in using appropriate reduction and mitigation
measures.
Q.2. In your written testimony and during your opening remarks,
you noted that ``. . . despite record high levels of home
ownership, African-American and Hispanic American home
ownership rates remain below 50 percent.'' You expressed your
commitment to work to address this situation so that ``. . .
barriers to home ownership are torn down for everyone. . . .''
I appreciated this statement because in Southern Idaho,
Hispanic home loan borrowers are rejected at twice the rate of
other borrowers, 33 percent versus 17 percent. Many factors
contribute to this current situation, but I am interested in
working together to improve it. Can you please share some of
your thoughts on how we can work to achieve this shared goal?
A.2. Expanding opportunities for homeownership to populations
that are underserved will be among my highest priorities at HUD
if confirmed. One possible way of reaching these populations is
to provide greater access to FHA, through reductions in up-
front mortgage insurance premiums and other mechanisms. Late
last year, HUD issued regulations that reduce up-front
insurance premiums by one-third, eliminate annual premiums
after a homeowner has built 22 percent equity in the home, and
pay premium refunds to current FHA borrowers. I will closely
monitor the impact of these changes. In early February, the
General Accounting Office is reporting to Senator Wayne Allard
on an analysis of the FHA Mutual Mortgage Insurance (MMI) Fund
under various economic conditions. Based on that analysis as
well as review of HUD's fiscal year 2000 Actuarial Review of
the MMI Fund released in the last few days, I intend to explore
ways to expand homeownership opportunities to underserved
populations through FHA.
Q.3. You are no doubt aware that Idaho has a significant rural
population. With this in mind, I am extremely interested in
working with you to identify new and innovative ways to address
home ownership challenges facing rural Americans. What are your
plans to examine this situation and make sure that the housing
needs of our rural population are addressed?
A.3. Housing and community development in rural areas will be a
key component of HUD's mission under my Administration if
confirmed. According to HUD's Worst Case Housing Needs report
released in March 2000, 32 percent of very low-income
nonmetropolitan renters suffered from worst case housing needs,
and 54 percent of extremely low-income nonmetropolitan renters
suffered similar needs. At the same time, between 1991 and
1997, the number of housing units in nonmetropolitan areas
affordable to extremely low-income renters declined by 5
percent. And although not under HUD's jurisdiction,
affordability contracts with Rural Housing Service housing
developments are beginning to expire, and presents the
Department of Agriculture (DOA) with a problem similar to HUD's
recent Section 8 ``opt-out'' challenge. I expect to work with
DOA on this issue to offer any assistance the Department may
appropriately provide. In addition, on the issue of
homeownership for rural Americans, one area I am particularly
interested in exploring is a greater focus on homeownership
counseling for families with FHA mortgage insurance. Education
and counseling could be an important tool to expand
homeownership opportunities in rural areas.