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The HOME program I know

By Shaun Donovan,

The Post published a front-page story last month painting an ominous picture of local corruption fed by federal mismanagement on the part of officials who “largely looked the other way.” The multipart series “Million-dollar wasteland” on the HOME Investment Partnerships Program purported to uncover “a trail of failed developments in every corner of the country,” with millions of taxpayer dollars wasted on “troubled developers” and other bad actors.

That’s a far cry from the program that I oversee as President Obama’s housing secretary and that I worked with as New York City’s housing commissioner. The HOME program I know helps communities build affordable homes and rehab existing ones for low-income families.

The program provides down-payment assistance to help creditworthy families become homeowners and housing vouchers to poor families and those on the brink of homelessness.

HOME produced more than a million affordable homes in the past two decades and leverages nearly $4 of private and other public investment for every dollar it invests. The program was a semifinalist for Harvard’s Innovations in American Government award in 2005.

So, how did The Post arrive at such a different conclusion? Well, in part because its basic analysis of the program was so far off.

Let’s start with the number of projects that The Post deemed “stalled.” Late last year, of the 28,000 HOME projects underway across the country, The Post focused on 5,100 brick-and-mortar projects receiving at least $50,000 in funding. It reported finding significant delays or abandonment in approximately 700.

Although HUD provided data and information to The Post for more than a year, the paper has not shared with us the list of projects it generated. So after the articles ran, we conducted our own project-by-project review using The Post’s parameters. We determined that more than half of 797 projects that could have been flagged as “stalled” based on The Post’s criteria are finished.

Of the remaining projects, 97 have been canceled and their funding moved to viable projects, while 154 are progressing toward completion. The final 85 properties are experiencing delays, but in the vast majority of cases there is a simple reason for this: the recession.

As any real estate professional will attest, the recession has made it extremely hard to secure financing and build units. According to census data reviewed by HUD, 34 percent of all new housing starts from 2007 to 2010 were delayed at least three years.

In all, however, less than 4 percent of the projects in The Post’s sample of more than 5,000 HOME projects are currently delayed or canceled. That’s far fewer than the nearly 1 in 7 that The Post reported were significantly delayed — and it tells me that HOME’s success rate during the recession far outpaced the private market’s. What’s more, The Post gave the impression that when there were delays, federal money was wasted. In fact, when there are delays, money can be moved to other viable projects or must be returned if it is not used within five years.

The Post also accused the federal government of “trusting local agencies to police projects.”

In other words, it’s a block grant. HOME, which was signed into law by President George H.W. Bush in 1992, provides funds directly to state and local governments to meet local needs for affordable housing.

Instead of one-size-fits-all rules that tell communities what to do and how to do it, communities themselves select and contract with developers and monitor construction.

That’s not to suggest there isn’t a federal role. We take our oversight responsibility seriously, by holding localities accountable for spending block grant funds appropriately.

When a project isn’t completed according to our rules, we always force repayment of HOME funds — 100 percent of the time. Since the start of this program in 1992, local housing agencies have repaid $250 million. That includes funds taken back from agencies mentioned in the article.

Even before The Post stories ran, the Obama administration had taken important steps to ensure that every dollar is spent wisely. Last year we began automatically canceling projects that fail to get underway, which has freed up $290 million this year to be committed to viable projects.

To improve the already strong monitoring system, we’re also proposing rules so fewer developments run into trouble in the first place, including stronger standards for developers, tougher underwriting requirements and additional spending deadlines.

President Obama has said that we must rebuild America to win the future.

By producing a million affordable homes, by generating nearly $4 for every taxpayer dollar it invests and by ensuring that communities — not Washington — can decide what’s best for them, it’s clear that HOME is providing an excellent return for the taxpayer while making our communities stronger and better prepared to meet the challenges of the 21st century.

Now, that’s a story worth telling.

The writer is U.S. secretary of housing and urban development.

© The Washington Post Company