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[108 Senate Hearings]
[From the U.S. Government Printing Office via GPO Access]
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S. Hrg. 108-870
NOMINATIONS OF: ROMOLO A. BERNARDI,
DENNIS C. SHEA, AND CATHY MACFARLANE
=======================================================================
HEARING
before the
COMMITTEE ON
BANKING,HOUSING,AND URBAN AFFAIRS
UNITED STATES SENATE
ONE HUNDRED EIGHTH CONGRESS
SECOND SESSION
ON
NOMINATIONS OF:
romolo a. bernardi, of new york, to be the deputy secretary of the u.s.
department of housing and urban development
__________
dennis c. shea, of virginia, to be assistant secretary for policy
development and research of the u.s. department of housing and urban
development
__________
cathy macfarlane, of virginia, to be assistant secretary for public
affairs of the u.s. department of housing and urban development
__________
APRIL 21, 2004
__________
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COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS
RICHARD C. SHELBY, Alabama, Chairman
ROBERT F. BENNETT, Utah PAUL S. SARBANES, Maryland
WAYNE ALLARD, Colorado CHRISTOPHER J. DODD, Connecticut
MICHAEL B. ENZI, Wyoming TIM JOHNSON, South Dakota
CHUCK HAGEL, Nebraska JACK REED, Rhode Island
RICK SANTORUM, Pennsylvania CHARLES E. SCHUMER, New York
JIM BUNNING, Kentucky EVAN BAYH, Indiana
MIKE CRAPO, Idaho ZELL MILLER, Georgia
JOHN E. SUNUNU, New Hampshire THOMAS R. CARPER, Delaware
ELIZABETH DOLE, North Carolina DEBBIE STABENOW, Michigan
LINCOLN D. CHAFEE, Rhode Island JON S. CORZINE, New Jersey
Kathleen L. Casey, Staff Director and Counsel
Steven B. Harris, Democratic Staff Director and Chief Counsel
Mark A. Calabria, Senior Professional Staff
Jonathan Miller, Democratic Professional Staff
Jennifer Fogel-Bublick, Democratic Counsel
Joseph R. Kolinski, Chief Clerk and Computer Systems Administrator
George E. Whittle, Editor
(ii)
C O N T E N T S
----------
THURSDAY, FEBRUARY 26, 2004
Page
Opening statement of Chairman Shelby............................. 1
Opening statements, comments, or prepared statements of:
Senator Sarbanes............................................. 2
Senator Dole................................................. 3
Senator Reed................................................. 4
Senator Allard............................................... 5
Senator Schumer.............................................. 6
WITNESSES
James T. Walsh, a U.S. Representative in Congress from the State
of New York.................................................... 7
Robert Dole, a former U.S. Senator from the State of Kansas...... 8
John W. Warner, a U.S. Senator from the State of Virginia........ 9
Hillary Rodham Clinton, a U.S. Senator from the State of New York 26
NOMINEES
Romolo A. Bernardi, of New York, to be Deputy Secretary, U.S.
Department of Housing and Urban Development.................... 11
Biographical sketch of nominee............................... 27
Response to written questions of:
Senators Shelby and Sarbanes............................. 47
Senator Reed............................................. 47
Dennis C. Shea, of Virginia, to be Assistant Secretary for Policy
Development and Research, U.S. Department of Housing and Urban
Development.................................................... 13
Biographical sketch of nominee............................... 35
Response to written questions of:
Senators Shelby and Sarbanes............................. 55
Senator Reed............................................. 55
Cathy MacFarlane, of Virginia, to be Assistant Secretary for
Public Affairs, U.S. Department of Housing and Urban
Development.................................................... 14
Biograhpical sketch of nominee............................... 41
Additional Material Supplied for the Record
Letter from Richard M. Daley, Mayor, City of Chicago, to Senator
Paul S. Sarbanes, dated April 20, 2004......................... 60
(iii)
NOMINATIONS OF:
ROMOLO A. BERNARDI, OF NEW YORK,
TO BE DEPUTY SECRETARY
DENNIS C. SHEA, OF VIRGINIA,
TO BE ASSISTANT SECRETARY FOR
POLICY DEVELOPMENT AND RESEARCH AND
CATHY MACFARLANE, OF VIRGINA,
TO BE ASSISTANT SECRETARY
FOR PUBLIC AFFAIRS
U.S. DEPARTMENT OF HOUSING
AND URBAN DEVELOPMENT
----------
WEDNESDAY, APRIL 21, 2004
U.S. Senate,
Committee on Banking, Housing, and Urban Affairs,
Washington, DC.
The Committee met at 2:04 p.m., in room SD-538, Dirksen
Senate Office Building, Senator Richard C. Shelby (Chairman of
the Committee) presiding.
OPENING STATEMENT OF CHAIRMAN RICHARD C. SHELBY
Chairman Shelby. The hearing will come to order.
We have three nominees to consider this afternoon, and I
appreciate the willingness of the nominees to appear before the
Committee today.
Our first witness will be Mr. Romolo A. Bernardi, nominated
to be the Deputy Secretary of the Department of Housing and
Urban Development. Currently, Mr. Bernardi serves as HUD's
Assistant Secretary of Community Planning and Development,
where he oversees many of HUD's most important programs,
including the Community Development Block Grant Program and the
HOME Investment Partnership Program. Mr. Bernardi was the
fifty-first mayor of the City of Syracuse, New York.
Our second witness is Ms. Cathy MacFarlane--welcome--
nominated to be Assistant Secretary for Public Affairs for the
Department of Housing and Urban Development. Most recently, Ms.
MacFarlane served as Director of the Office of Public Affairs
at the Federal Trade Commission. She has also held a variety of
public affairs positions with the National Institute for
Justice and the Federal Bureau of Investigation.
Our final witness this afternoon is no stranger to the
Senate. It is Mr. Dennis Shea, who has been nominated to be
Assistant Secretary for Policy Development and Research for the
Department of Housing and Urban Development. I would like to
take a second just to welcome Mr. Shea back to the Senate. As
we all know, he spent a lot of years working with Senator Dole
when he was the Minority Leader and when he was the Majority
Leader. And we are also glad to see Senator Dole, as well as
Senator Schumer and others here today.
I want to commend all of today's nominees for their
willingness to take on what will surely be a difficult job.
Over the years, HUD has consistently been plagued by problems
of management and miscommunication. While I believe former
Secretary Martinez and current Secretary Jackson have made
considerable progress, a lot remains to be done.
After we administer the oath, the nominees may make their
opening statements. You can also feel free, at that time, to
introduce any members of your family that are here today. But
before we start that, I want to yield to Senator Sarbanes and
then Senator Dole.
STATEMENT OF SENATOR PAUL S. SARBANES
Senator Sarbanes. Thank you very much, Mr. Chairman. I am
pleased to join with you in welcoming the nominees before the
Committee today and our colleagues who are going to be
presenting them.
Mr. Bernardi, of course, has been here before when he was
up to be Assistant Secretary of Community Planning and
Development, and we are very pleased you are going to continue
your work at HUD. The programs you have been overseeing--CDBG,
HOME, the homeless programs--are some of the most effective and
important at HUD. You have done a good job as Assistant
Secretary, and as you move to the Deputy Secretary's office,
your responsibilities will obviously grow. And I am confident
that you are well-qualified to take on this new challenge.
I have, Mr. Chairman, a statement by Senator Clinton, who
is unable to be with us today, but wants it included in the
record.
Chairman Shelby. Without objection, it will be ordered.
Senator Sarbanes. And I will not read it, but let me just
say it is very effusive in its praise of Former Mayor Bernardi
and the Assistant Secretary.
[Laughter.]
She appeared here before us to support your appointment
before, and she says, ``I am happy to say that he has met my
highest expectations.'' We are very pleased with that.
I am pleased Mr. Shea is with us today. He, of course,
worked here in the Senate and worked for Senator Dole as
counsel in his office. So we welcome him back. He is familiar
with the workings of this institution, and we look forward to
his testimony to be the Assistant Secretary for Policy
Development and Research.
And Ms. MacFarlane, you have had extensive experience, both
inside and outside, of Government, most recently with the FTC.
In fact, I believe you may have still been at the Commission
when the settlement with Fairbanks Capital was announced.
Ms. MacFarlane. Yes, sir.
Senator Sarbanes. That was a very good event and a very
helpful agreement, and we expect the Department will benefit
from your broad experience as we consider you to be the
Assistant Secretary for Public Affairs.
Mr. Chairman, I want to take just a moment to make one
point for all of the nominees. It is extremely important, that
this Committee and HUD work together whenever possible, and it
should be possible all of the time. As the authorizing
committee for most of the Department's programs, we need to
make sure there is an ongoing exchange of information and
ideas. We may not always agree on what policies HUD should
pursue, but obviously the Committee and the Committee staff
need to have timely access to important information about the
programs run by the Department.
I mention this because there continues to be some
resistance at HUD to providing information, which we have
sought as recently as 2 weeks ago, about the voucher program,
although we had gotten similar such information in the past. We
wanted update information on the program, and I intend, of
course, to ask the nominees for their commitment that they will
provide information to the Committee and to the Congress in a
timely fashion. We need this information if we are going to do
our oversight function, which we take seriously, and which I am
very pleased to say that Chairman Shelby has placed high on our
priority list in terms of exercising our oversight. And it is a
matter of concern whenever the Department seems to be dragging
its feet in response to reasonable requests for information,
but I will pursue that with each of the nominees in turn.
Thank you very much, Mr. Chairman.
Chairman Shelby. The current Senator Dole.
STATEMENT OF SENATOR ELIZABETH DOLE
Senator Elizabeth Dole. Thank you, Mr. Chairman, for this
opportunity to speak about our three nominees. I think I have a
little competition over here from Juliette.
[Laughter.]
Senator Elizabeth Dole. Mr. Bernardi has an excellent
record of building stronger communities across the Nation and
especially in the City of Syracuse. He distinguished himself as
the Mayor of Syracuse for almost 8 years before beginning his
work at HUD and has an impressive list of accomplishments in
making communities more livable. This is exemplified in his
work to remediate brownfield sites, reclaiming those industrial
wastelands, turning them around and providing economic
opportunity and jobs.
The effort to renew and improve our urban communities is
very important to me, and I appreciate Mr. Bernardi's
background and focus on these issues. Ms. MacFarlane has also
distinguished herself as an excellent servant of the public.
Her assistance at the Federal Trade Commission was invaluable
to me and to my staff as we worked to reauthorize the Fair
Credit Reporting Act, and of course I welcome you today as a
fellow alumnus of the Federal Trade Commission.
And, finally, I take great pleasure in recognizing the
third nominee and the distinguished gentleman who has come
before us to introduce him. I cannot help but recall the
afternoon some years ago, when my husband, Mr. Chairman,
introduced me to a Senate Committee on my nomination for
Secretary of Transportation. Bob said at that time, ``I regret
that I have but one wife to give to my country's
infrastructure.''
[Laughter.]
Senator Elizabeth Dole. Now, that was all right, but then
he went on to say that he expected the Federal Highway
Administration at DOT to use my biscuit recipe to fill
potholes. Can you imagine?
[Laughter.]
Senator Elizabeth Dole. It is so tempting to exact a little
revenge this afternoon, Mr. Chairman, but I will restrain
myself.
Seriously, this is a special day for both Bob and me, for
Dennis Shea is a member of our extended family. I first met
Dennis when he was working as Deputy Chief of Staff to my
husband in the Republican Leader's Office, and I came to know
him as a man of extraordinary intelligence, judgment and, above
all, integrity. He gained a reputation throughout the Senate as
someone who works well with people of both parties and whose
overriding passion is finding the best policy to solve a tough
problem.
Dennis' imprint is on many bills passed by Congress to
fight crime and illegal drugs, and he helped broker the
compromise that led to the enactment of the Civil Rights Act of
1991. Dennis handled labor issues for Bob when I was Secretary
of Labor, and my staff and I were impressed with his deep
understanding of the complex problems facing the working poor
in our country, including access to affordable housing.
Dennis grew up in Queens, New York, and this background has
given him a deep consciousness of the challenges and
opportunities facing our cities. The many issues he will
confront at HUD require the compassion and balance that I know
Dennis will bring to his new position. I recommend that all of
my colleagues support this outstanding man's confirmation to
serve as HUD Assistant Secretary for Policy Development and
Research.
Thank you, Mr. Chairman.
Chairman Shelby. Senator Reed.
STATEMENT OF SENATOR JACK REED
Senator Reed. Thank you very much, Mr. Chairman and Senator
Sarbanes, for holding this hearing, which is a very important
process in our constitutional duties to confirm these very able
and experienced public servants. I have had the privilege to
work with Secretary Bernardi, and I have enjoyed it very much
and look forward to working with Ms. MacFarlane and Mr. Shea.
You are taking on extraordinary tasks and opportunities,
but also challenges, particularly since your department
represents some of the country's most vulnerable families and
vulnerable people in our entire Nation. Many of these people
are elderly and disabled or just do not have the luck that
others have, and they do not have powerful lobbyists typically
to defend them, so it falls upon you to work for them, and I
know and hope you will.
And, Mr. Bernardi, you particularly will have significant
responsibilities. You will be responsible for working within
the Administration for appropriate resources for our Nation's
housing programs. I think all of us here will say, without
contradiction, how important housing is and how much we need to
do, but really it is the resources available that limits us or
enables us to do those things, and that is a difficult fight
you are going to have to urge.
We have seen the current budget where there are proposals
for cutting the Section 8 voucher program by $1.6 billion. So
your job will be to convince people that what you believe in is
what they should believe in, and I wish you well.
And, also, Secretary Bernardi, you will be responsible for
the operations of HUD and the improvements. Years ago, when I
first came to this Committee, HUD was one of the agencies
identified as being in serious trouble. Problems still remain,
so we expect you to devote yourself to that.
I had a chance to meet Mr. Shea, and I was impressed with
his, as Senator Dole said, his intelligence, his integrity, and
his dedication. Again, Ms. MacFarlane, I look forward to
working with you.
Thank you so much for be willing to serve the Nation in and
a very important agency. Thank you.
Chairman Shelby. Senator Allard.
STATEMENT OF SENATOR WAYNE ALLARD
Senator Allard. Mr. Chairman, I am going to be brief. I
have a full statement I want to put in the record.
Chairman Shelby. Without objection, it will be made part of
the record.
Senator Allard. I do want to welcome Senator Dole. It is
good to see him here, and I just want to recognize, in a public
way, all of his fine work on the World War II Memorial. We are
going to have a lot of veterans here, and we are going to have
an open house in my office for him and others because I think
we are going to be overwhelmed with veterans here coming into
the Capitol to celebrate that time.
Also, I just would like to say that I am glad that we have
Alphonso Jackson confirmed. And now that we have had a
transition of leadership, it is important that we get moving
ahead with a number of vacancies currently at HUD. Your
Committee has always shown a willingness to move ahead with
those. I think we need to urge HUD and the various authorities
to be sure and get those names to us as quickly as possible so
we can get those vacancies filled.
I would also just reiterate the fact that the Government
Performance and Results Act--which is something I keep
hammering on all of the time with everybody that comes before
us, it is called GPRA, some people just call it the Results
Act--this is a way of measuring performance of what is
happening in the various agencies. I think this is especially
important in HUD because it has revealed some problems in the
past. It is improving, but again continue to push on this GPRA.
And then, finally, I would just follow up that there is a
constitutional relationship between the legislature and the
executive branch. It is important that we maintain that
perspective, and I would hope that each and every one of you--
when the Committee requests information--that you respond in an
expeditious way and get the information to us. We need that to
do our job and to represent our constituencies, so I would just
second what has been said in that regard, and I will thank you,
Mr. Chairman.
Chairman Shelby. We have some special guests here. We will
start with first on our list is former Mayor Bernardi, and
Senator Schumer and Representative Walsh I think are here to
introduce him or say something.
STATEMENT OF SENATOR CHARLES E. SCHUMER
Senator Schumer. Thank you, Mr. Chairman, and thank you for
holding a timely hearing. I am here, of course, to support the
nomination of Roy Bernardi for Deputy Secretary, but first let
me congratulate our other two nominees for their good work, and
I want to particularly say, Mr. Chairman, this is a good day
for New York.
Mr. Shea is from Queens, Burns Street in Forest Hills. I
correctly guessed that he was from Mary Queen of Martyrs
Parish.
[Laughter.]
And I welcome him here as well. New York has always had the
habit of sending people--people come to New York, sally forth
around the rest of the Nation and do great things. And so
Senator Warner, we have sent you one of our best, now that he
is a Virginia resident.
I want to welcome Senator Dole here as well, and my good
colleague and a Congressman who has served Syracuse for so long
and so well, Congressman Walsh, who got a new haircut today I
see for this occasion.
[Laughter.]
Mr. Chairman, it is my honor to be here next to Roy
Bernardi, and I support this nomination unequivocally. Roy is a
native Syracusan, born in Syracuse and worked his way up
through the ranks here. He served five terms as City Auditor,
where he developed an outstanding reputation as somebody of
integrity, and he actually overhauled municipal financial
services, eliminated duplicative department functions and
streamlined governmental operations, resulting in a lot of
budget savings.
His good work as auditor led him to his next job, which was
Mayor, and he was really a fine and outstanding mayor at
Syracuse. He combined the understanding that you needed to be
fiscally responsible. In our cities upstate, we are trying to
keep the lid on things because, comparatively, we do not want
to pay more taxes than other places, so we can attract jobs,
and yet at the same time New York has a real tradition of
compassion, and Mayor Bernardi was able to do both of those. He
was able to be fiscally responsible and yet unite the city and
be compassionate as well, and he was an outstanding mayor.
I will not forget, Mr. Chairman, I just had been elected
Senator in 1999, had beaten a Senator who Roy had worked with
of his party, and I was wondering what kind of reception I
would get, and he opened the door for me, and we worked well
together from the day I became Senator, which I think speaks to
his bipartisanship, as well as his character.
Chairman Shelby. Plus, he was a wise man, too.
[Laughter.]
Senator Schumer. Indeed, as you are, Mr. Chairman.
In any case, he will make an outstanding Deputy Secreatry.
He has all of the good qualities needed to be a Deputy
Secretary of HUD. He understands how to run a large
organization. He is fiscally responsible and moderate and at
the same time is compassionate and understanding. He did an
outstanding job as Secretary for CPD, for Community Planning
and Development, and I think we are all very impressed with the
job he did.
And so, as they say, Mr. Chairman, he got his promotion to
Deputy Secretary the old-fashioned way--he earned it. It is my
honor to be here with him and to welcome Alice, his wife, and
his two children, Dante and Bianca, here today.
And I would ask unanimous consent my entire statement be
put in the record.
Chairman Shelby. Without objection, so ordered.
Representative Walsh, do you have anything to add to that?
STATEMENT OF JAMES T. WALSH
A U.S. REPRESENTATIVE IN CONGRESS
FROM THE STATE OF NEW YORK
Reprensentative Walsh. I will try not to be repetitive, Mr.
Chairman, but former Mayor Bernardi has certainly made his
remark in our community, and I want to be here to support him.
So, Mr. Chairman, Senator Sarbanes, and Members of the
Committee, thank you for inviting me to be here with you today
and sit with the distinguished panel here, including our
Senator from New York, Senator Schumer, with whom I work very,
very closely on many issues.
Former Senator Dole, who even though I represent a city, he
came out and visited a farm in the Eastern part of my district
one time on a very, very cold Upstate New York day, and he did
it very graciously, Senator Warner, also.
I am here to support my former mayor and close personal
friend, Roy Bernardi. He has served well as Assistant Secretary
of Community, Planning and Development, for the Department of
Housing and Urban Development, and as Chairman of the House
Subcommittee for VA, HUD, and Independent Agencies, we have
worked very, very closely since his appointment in 2001.
Prior to joining the Bush Administration, Mr. Bernardi was
the fifty-first mayor. And I have a special affection for
mayors of Syracuse. My dad was the forty-eighth mayor and also
served in the House of Representatives.
I also had the pleasure of working with Roy on a variety of
community issues during his tenure as Mayor and as City
Auditor. I served on the City Council in Syracuse while Roy was
cit auditor, and we worked very, very closely together. He was
a promoter of urban neighborhoods, a believer in cities, and
someone who implemented initiatives all throughout the city to
improve the quality of life of its residents.
Along with the men and women of the Syracuse Police
Department, Mayor Bernardi made a remarkable change in reducing
violent crime in Syracuse to the lowest levels in recent
history, and this is no small accomplishment in an urban
center.
On a personal note, I would like to extend my
congratulations to his wife, Alice, and the two kids, Dante and
Bianca. I have a good friend at home who always says, ``Behind
every successful man there is a very surprised woman.''
[Laughter.]
This is a solid family who offers a great deal, including
their dad and husband, to the service of the United States of
America. Rising to the position of Deputy Secretary of HUD is
both challenging and exciting. The responsibilities are great,
and sound judgment on issues dealing with national housing
policy require a constant effort by both the Deputy Secretary
and his team. Roy has proven over the years to listen carefully
before making judgments on policy matters, whether local or
national. He will reach out to others to seek their advice
which, in my view, is a sound business practice needed to be a
good manager. He also returns telephone calls when contacted by
Members of Congress, which I know within this room is
considered a high mark.
I know this Committee will be pleased with the caliber of
this nominee, and the others, and I extend my congratulations
at this time to them also.
The people of Mayor Bernardi's hometown of Syracuse are
very, very proud of their native son.
Thank you very much.
Senator Sarbanes. I always thought it was a surprised
mother-in-law that was behind every successful man.
[Laughter.]
Representative Walsh. There is plenty of surprise to go
around.
Chairman Shelby. We will next hear from Senator Dole and
Senator Warner on behalf of Dennis Shea.
Senator Dole.
STATEMENT OF ROBERT DOLE
A FORMER U.S. SENATOR FROM THE STATE OF KANSAS
Senator Robert Dole. It is good to be in the Committee room
again with another Senator Dole. I never made it to the Banking
Committee. I just did not have the intelligence and the
seniority or I did not have any money.
Chairman Shelby. You did not represent North Carolina.
[Laughter.]
Senator Robert Dole. They have a lot of banks in North
Carolina.
Chairman Shelby. Yes, absolutely.
Senator Robert Dole. Charlotte is the banking capital of
the world. New York is a close second.
[Laughter.]
But Wayne Allard mentioned, and I just want to mention
because if you live I Maryland or Virginia, you are going to
see more World War II veterans than you thought ever existed.
We think between 2- and 300,000 will be there that day. And
some of these men are just living long enough to be here for
this dedication.
Senator Allard. I could not remember the date. You can
share the date with us maybe, Senator Dole.
Senator Robert Dole. Yes, May 29, and there are 118,000
seats, and the tickets are already gone for those. And now we
are trying to find more space because some of these men are
amputees. Some cannot walk. Some cannot see. So it is going to
be a great day, and I appreciate Wayne mentioning it.
But, as an aside, Dennis Shea's father was in the Navy, in
the South Pacific. So he is one of the World War II vets, one
of that ``Greatest Generation'' that Tom Brokaw referred to,
which is now becoming a disappearing generation. We are losing
about 1,200 per day. We are down to less than 5 million out of
16.5 million.
But I want to say a special thank you to Senator Warner,
who helped us out. We did not ask for Federal money. We said if
we cannot raise it, we will not build it. But he did help me
out, when we got in a little crack, and I offered to pay the
money back, and I think it is still pending, and I have not
mailed the letter.
[Laughter.]
But, in any event, I am really here today for the purpose
of introducing--I know it is going to be a tough hearing and a
tough vote for all of these nominees, I can already tell, but
Dennis Shea and I have worked together for about 15 years--
first, my Staff Counsel and then Deputy Leader of the Chief of
Staff when I was Majority Leader and Republican Leader of the
Senate and also in the private practice of law. So I have had
three different areas to work with Dennis.
But above all, I think what I would stress is integrity. He
also watched me on ethics. Anything I wanted to check on to see
if I could do this, I would give it to Dennis, and there were a
lot of things I wanted to do, he would not let me do.
[Laughter.]
So he has told me, no, many, many times and probably for my
own benefit. But, Dennis, I thank you for that.
But if you are looking for someone who is willing to work,
and who is a man of intelligence, and a man of integrity, who
has a wife named Elizabeth, this is your nominee.
That is my entire statement, and make it part of the
record.
[Laughter.]
Chairman Shelby. Senator Warner.
STATEMENT OF JOHN W. WARNER
A U.S. SENATOR FROM THE STATE OF VIRGINIA
Senator Warner. Mr. Chairman and Members of the Committee,
I am breathless. This is my 26th year in the Senate, and most
of it was spent with Bob Dole, who I never met a finer man in
my life. I mean that. You know that.
We went to the 50th anniversary of D-Day together, and to
Italy, where he spoke to a crowd as far as the eye could see.
And then we went to visit his battleground, and those are
things that bond individuals that you never forget. Bob is the
big brother I never had in life, and it is such a privilege to
be here today. And now you are successor Senators on the Armed
Services Committee, and so the Dole family has been a part of
my life.
I have come to represent Dennis Shea, and why should I take
more time than you took?
Senator Robert Dole. Because you have a vote.
Senator Warner. Oh, I have a vote. Yes. Right.
[Laughter.]
He could always put me down with a one-liner. But I will
put my staff on behalf of Dennis in the record because you have
spoken so eloquently.
Chairman Shelby. Without objection, so ordered.
Senator Warner. But I will just say one thing. As a young
Senator, when I came to see Senator Dole, I had to sit out in
his office and wait to see him out of his office. So, from now
on, you are going to wait out in my anteroom to see me, subject
to confirmation.
[Laughter.]
So, I will put the rest of it in, and it is really an
extraordinary accomplishment, remarkable how the President and
the Secretary of HUD can find two such eminently qualified
individuals.
Now, to this other lovely individual, Cathy. I have quite a
bit to say about her. She is here with her mother and father;
is that what I understand?
Chairman Shelby. Right here, right.
Senator Warner. Yes. She has been nominated to serve as
Assistant Secretary and has over 24 years of experience in
public relations.
Dole could have used you.
[Laughter.]
Public relations, and Government Affairs and
Communications.
She has served two Administrations, President Ronald Reagan
and the current one at the Federal Trade Commission, in
substantive positions with honor and distinction. Most recently
she served as Director of Public Affairs for the FTC and was
instrumental in the communications outreach for the National Do
Not Call registry. You could have got elected on that to
anything you wanted to get elected to.
[Laughter.]
The Outreach and Communication Plan to promote the registry
has been an unqualified success and something I know many have
been grateful for, including this Senator. I do not know how
many of your families had dinners or other family functions
disrupted by the ill-timed phone calls, but speaking for
myself, I can say, Ms. MacFarlane worked a minor miracle. We
thank you.
She has earned the confidence of two Presidents, and I
believe she has more than the qualifications to handle this
next assignment, and I wish you well.
Thank you, Mr. Chairman and Members of the Committee, and
what a privilege to be with you, dear friend.
Chairman Shelby. I want to thank you----
Senator Robert Dole. Can I put my statement in the record?
Chairman Shelby. Without objection, Senator Dole's
statement will be made part of the record.
I want to say before Senator Dole and Senator Warner leave,
I believe, we know Dennis Shea real well, Mayor Bernardi, Ms.
MacFarlane, we know of your good work, and I believe you are
going to have a lot of support on this Committee, but we still
have got to go through a hearing.
Thank you.
[Laughter.]
If the nominees will stand and raise your right hand.
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. Bernardi. I do.
Mr. Shea. I do.
Ms. MacFarlane. I do.
Chairman Shelby. Do you agree to appear and testify before
any duly-constituted committee of the Senate?
Mr. Bernardi. I do.
Mr. Shea. I do.
Ms. MacFarlane. I do.
Chairman Shelby. Take your seat.
All of your written testimony will be made part of the
record in its entirety. And we will start with you, if I can
call you, Mayor, with your testimony, if you will sum this up
as briefly as you can.
STATEMENT OF ROMOLO A. BERNARDI, OF NEW YORK
TO BE DEPUTY SECRETARY
U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Mr. Bernardi. I thank you, Mr. Chairman, Ranking Member
Sarbanes, and Senator Dole, Senator Allard, and Senator Reed.
It is a pleasure to be here. I want to start by thanking
Senator Schumer and Congressman Walsh for their very kind
words. It is also nice obviously to be with Senator Dole and
Senator Warner.
My name is Roy Bernardi, and I am the Assistant Secretary
for Community Planning and Development at the Department of
Housing and Urban Development, and I am here to thank you for
inviting me to appear as President Bush's nominee for the
position of Deputy Secretary.
I want to express my gratitude to the President for the
confidence that he has shown in me. For 3 years, I have had the
pleasure of working with Deputy Secretary, at that time,
Jackson, now it is Secretary Jackson, and I am thankful for the
confirmation that this Committee provided for him. And I look
forward, hopefully, to be working with him as his Deputy
Secretary.
It is a pleasure to be here with my two distinguished
colleagues, Cathy MacFarlane and Dennis Shea. All of those
wonderful words that were spoken of them, in working with them,
I find to be nothing but more than accurate, and they are very
good people.
At this time, I would like to introduce, have her stand, if
she would--she will be embarrassed--my wife, Alice, and our
son, Dante, and our daughter, Bianca, right behind me. Without
them, ladies and gentlemen, I do not know how it was put, in
spite of myself, I have been able to succeed, but with Alice's
help and the children's love and support each and every day is
just a God-given day, and it is a pleasure.
I take humble pride in what I am about to do. I am a first
generation Italian-American. My mom and dad migrated to this
country when they were teenagers. They met in an English class
in high school, learning the language skills and the working
skills in this country. They married and had four children. I
have an older sister, and a younger brother and a younger
sister, and I believe we have given them some measure of
happiness with our successes that we have attained. I grew up
in Syracuse's Northside. And when I went to first grade, I
distinctly remember I spoke Italian. I did not speak English,
and that was quite a challenge for my mom to get me back in
school.
As has been mentioned, I had the opportunity to be the
Syracuse City Auditor for 20 years, and 8 years nearly as Mayor
of the City of Syracuse, before President Bush and Secretary
Martinez asked me to serve as Assistant Secretary for CPD, and
it was an honor and a privilege to accept.
I know, in nominating me, President Bush has not only
honored me with this distinction, but also the important
responsibilities that come with it. The Deputy Secretary is the
Department's Chief Operating Officer, managing an agency of
some 9,000 employees, with a budget of approximately $31
billion. The Department is a little bit larger than what I
handled in the City of Syracuse as mayor, but I see the same
challenges. Obviously, they are magnified. I feel confident,
with my experience, that I will be able to do a good job for
the Secretary, the President, and more importantly, for all of
the people that we serve.
HUD's purposes are especially aimed at helping low- to
moderate-income individuals as you know. We want to supply
safe, decent, and affordable housing throughout no only the
largest cities, but also in the rural areas of America. We
administer economic development programs throughout the
communities, to revitalize decayed neighborhoods, and improve
the quality of life of all residents. We deal with everyone in
the spectrum. We deal with senior citizens, persons with
disability, people with HIV/AIDS, people that cannot afford
housing, people that need assistance. We deal with communities
to provide economic development to create jobs and create
economic opportunity for a better quality of life for everyone,
and I would look forward to working closely with Secretary
Jackson and President Bush to achieve our goals and objectives.
I will be committed to fostering better cooperation with
the people who serve at every grade and with unions
representing many of them. I will work to understand and
improve the bargaining process. In my 3 years as Community
Planning Development Assistant Secretary, I feel very good
about the relationship that I have had with the career
employees and the ability to work as a team to accomplish the
things that were charged to us, and I hope to bring that same
kind of commitment, that same kind of working together with all
of the employees, all of the union and nonunion employees in
HUD.
Let me assure you that I also intend to work closely with
this Committee, and its staff, and with other Committees and
anyone and everyone that needs information, and needs our
assistance, and needs our cooperation. I understand the
importance of the work that I am about to undertake with your
permission, and I know full well that it is a partnership, that
the Administration and the legislative body must work together,
that we all have the same goals and objectives that we want to
obtain, and that is to help the people that are going to be
served by the money and the over 300 programs that we have in
HUD.
I thank you and I would like to enter this into the record,
if I could, Mr. Chairman.
Chairman Shelby. Without objection.
Mr. Bernardi. I look forward to your questions. Thank you.
Chairman Shelby. Mr. Shea.
STATEMENT OF DENNIS C. SHEA, OF VIRGINIA,
TO BE ASSISTANT SECRETARY FOR POLICY
DEVELOPMENT AND RESEARCH,
U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Mr. Shea. Chairman Shelby, Ranking Member Sarbanes, and
Members of the Committee, good afternoon, and thank you for
convening this hearing during this busy legislative session. It
is a privilege to be here with you today, along with my
colleagues, Roy Bernardi and Cathy MacFarlane.
I want to thank Senator Dole or Senators Dole, and Senator
Warner for their kind words of introduction. Serving the leader
was an honor. It involved a lot of hard work and long hours,
but I must say it was a lot of fun too.
If I may have the Committee's indulgence, I would like to
introduce two important people----
Chairman Shelby. We have been waiting for that.
[Laughter.]
Mr. Shea. I think you have been introduced to them already.
My wife, Elizabeth, is in the back, anlong with my 6-month old
daughter, Juliette. My parents, Dennis and Molly Shea of Forest
Hills are right behind me, as well as my Aunt Jeanne Clarke of
Bethesda, Maryland. I do not know where--there she is.
Chairman Shelby. Right back there.
Mr. Shea. Great. I, too, would like to express my
appreciation to President Bush for the honor of being nominated
as Assistant Secretary for the Office of Policy Development and
Research. I have been looking forward to the chance to work
with Secretary Jackson, so I am grateful that the Senate has
confirmed his appointment.
As you know, the Office of Policy Development and Research
provides advice and information to the Secretary to support the
Department's policies and proposals. PD&R compiles information
to monitor current housing needs and market conditions. The
Office also carries out both short-term and long-term research
on priority housing and community development issues. An
important responsibility of PD&R is to conduct evaluations of
our programs to make sure they are operating as Congress
intended. PD&R's mission within HUD is critical to the success
of our programs and to the achievement of Congress' goals. I
will see to it that this mission is carried out with
professionalism and integrity.
In my most recent job, as the Executive Director of the
President's Commission on the U.S. Postal Service, I was able
to lead a small staff in developing a comprehensive report
recommending ways to preserve universal mail service. I am
pleased that the Commission's report has been generally well-
received and is viewed as a substantial achievement,
particularly in light of our tight deadline and the fact that
no commissioner or staff member, including myself, came to this
assignment with any significant experience in postal policy.
I believe that this experience, as well as my other
experiences in the policy development arena, will help me be an
effective leader of the PD&R team. I am personally honored to
have the opportunity to join the men and women of PD&R, who, I
must say, are among the best and brightest of the HUD work
force.
Mr. Chairman, let me conclude by saying that, as a former
member of the staff of the U.S. Senate, I also have a deep
appreciation for this institution. Congress plays the central
role in legislating our Nation's housing policy and in funding
the programs that the Department administers. I look forward to
working with this Committee in an open and collaborative spirit
to advance the goals of affordable housing, homeownership and
strong communities that we all share.
Thank you for your attention, and I look forward to
answering any questions you may have.
Chairman Shelby. Ms. MacFarlane.
STATEMENT OF CATHY MacFARLANE, OF VIRGINIA,
TO BE ASSISTANT SECRETARY FOR PUBLIC AFFAIRS,
U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Ms. MacFarlane. Chairman Shelby----
Chairman Shelby. Do you want to introduce anyone?
Ms. MacFarlane. Yes, sir. I would like to introduce my
father, Joe MacFarlane, and my mother, Mary MacFarlane. I also
have numerous friends which I would like to just thank for
being here.
Chairman Shelby, Ranking Member Sarbanes and distinguished
Members of the Committee, thank you very much for inviting me
here to appear before you today with my colleagues, Roy
Bernardi and Dennis Shea.
I am honored that President Bush and HUD Secretary Alphonso
Jackson nominated me to be Assistant Secretary for Public
Affairs at HUD, and I am very grateful for the confidence that
they have shown in me.
The responsibility of directing the public affairs of a
Federal agency is a serious one, but not a new one to me.
During my tenure as Director of the Federal Trade Commission's
Office of Public Affairs, the Do Not Call registry was
authorized by Congress, as Senator Warner noted, and the task
of educating the American public about how to stop
telemarketers from contacting them became our responsibility.
Together with a staff of seven of the finest PR professionals
in the Federal Government, we reached out to every newspaper,
radio station, and broadcast outlet in the country. Six months
after the Do Not Call registry was launched, more than 55
million people had registered. And a recent Harris Poll survey
indicated that the Do Not Call registry was recognized by 92
percent of the American public.
If confirmed, I intend to make certain that the good news
about HUD's programs reached the eyes and ears of the people
who most need to benefit from them. Every day HUD assists low-
income families find safe and affordable shelter, they help
first-time homebuyers make their dream of homeownership a
reality, and they provide a means for individuals to move from
Government dependence to self-sufficiency. HUD's programs are
carried out by the executive branch, but we understand that
they are written here, in Congress. And legislation enacted by
Congress has opened the doors to homeownership for millions of
Americans.
I am honored to be the nominee for Public Affairs. With the
support of the Committee, I look forward to assisting in the
important work of keeping America informed about the Federal
Government's housing and community development policies.
Mr. Chairman and Senators, thank you for your courtesy in
listening to my remarks, and I would be happy to take your
questions.
Chairman Shelby. Thank you.
Mr. Bernardi, 2 years ago, the General Accounting Office,
GAO, testified before one of our Subcommittees and said that
``human capital is the most pressing management challenge
facing HUD.'' More specifically, GAO offered its opinion that
HUD did not even have an analysis of what its staffs should be
doing and what skills the staff needed to accomplish their
responsibilities.
How much progress, sir, has HUD made in strengthening its
human capital over the last 2 years, and do you have any
thoughts on what HUD can do to improve the productivity of its
staff ?
Mr. Bernardi. Mr. Chairman, HUD established a Human Capital
Steering Committee back in 2002. Presently, we are in the
process with a REAP report to ascertain not only the number of
individuals, but also what tasks need to be performed and the
individuals that have to perform them.
Quite candidly, I think that we are in the process of
reevaluating the total number of employees that have been
appropriated to us. That is 9,177. About half of the HUD
workforce is eligible for retirement. That is a major concern.
We need to make sure that as these people leave that we provide
the opportunity for middle management and people coming into
the program to be able to spend time so that we do not lose
that systemic knowledge that they have regarding the various
programs.
As the Deputy Secretary, if I am so confirmed, I will make
sure that each of the departments at HUD is staffed with the
necessary personnel, with the expertise that they will need, to
carry out their duties and functions.
Chairman Shelby. OMB, Office of Management and Budget, has
rated the Community Development Block Grant program, ``as
ineffective.'' More specifically, OMB states that the program
suffers from unclear purpose, loose targeting requirements, and
a lack of results. This is the largest program under your
direction within the Office of Community Planning and
Development, CPD.
What can you tell the Committee you see as some of the
sources of OMB's concern? Do you agree with those? And, if not,
why not? And could you also tell us what you have done during
your time at CPD to address some of these issues. These are not
new issues.
Mr. Bernardi. Senator, the Community Development Block
Grant program is the flagship program in Community Planning and
Development. It is budgeted at $4.6 billion, and I am sure, as
you are all aware, that money goes, on a formula basis, to over
1,100 entitlement communities to all 50 States, and the 50
States provide those dollars to the small towns and villages
that dot our country that are not entitlement communities.
It is a very flexible program. There is so much good that
is done with that program. You can use it for housing, you can
use it for brownfields, you can use it for homelessness, public
services, public facilities. You can build a recreation center.
And it is that beauty of the program that leaves the
discretion, if you will, and the prioritization of how that
money is spent at the local level. Obviously, there are
national objectives that have to be adhered to. So it is a
difficult program in which to be able to have performance
measurements.
Now, with OMB giving us a very low PART score, unlike the
score we received in the HOME program, where we received a very
high score, but the HOME program is a very targeted program. It
deals with people. It provides that $2 billion-plus to people
who are at 80 percent or less than median income, and the
average is 34 percent of median income. So that is really
targeted. It is a little easier to gauge your results.
Having said all of that, sir, we are in agreement with OMB.
We have implemented performance measurements here at
headquarters, into the field, and with the communities. We
would like the communities themselves to indicate to us what
kind of performance measurement system, in conjunction with us,
they would like to use, so that at the end of the day we can
indicate that the dollars that are going to their communities,
not only where they have been spent, but have they also
received the maximum value.
Having said that, be assured that we are looking to make
sure that the communities will be able to provide for us
performance measurements that we can use in the next budget
process.
Chairman Shelby. Mr. Shea, I want to touch on another point
raised by GAO. HUD, over the last 10 years or so, has been
increasingly reliant on outside contractors to perform many of
its responsibilities. I know this is not an issue solely in the
research area, but it does seem that most of the research
produced by HUD is conducted by outside parties. GAO has raised
the issue of HUD's ability to effectively monitor its
contractors.
Could you detail for the Committee, and if you want to do
it for the record you could do that, your relevant experience
in monitoring and evaluating contract performance because you
are going to have to do some of that in the future.
Mr. Shea. Yes. I had, in my most recent experience, Mr.
Chairman, as the Executive Director of the President's
Commission on the Postal Service, I was involved in making
decisions on nine procurements. We procured nine outside
contracts to assist the Commission in performing its work, and
these were done on a pretty fast-track basis.
And I think, in that capacity, I was pretty clear in
evaluating what contracts were successful, and there are a
couple of contracts that I do not think the performance was up
to snuff, and I registered that sentiment to the people who
performed the work for us. So, as you know, PD&R contracts out
a lot of its research.
Chairman Shelby. Sure.
Mr. Shea. And PD&R is currently aggressively pursuing
opportunities to find small businesses to contract out----
Chairman Shelby. I am not necessarily against contracting
out, but they just have to be monitored in what you pay them
for.
Mr. Shea. If confirmed, that will be one of my priorities:
To ensure that we have strong systems in place to monitor
contract performance. Currently, PD&R has systems in place
under the general deputy assistant secretary for PD&R. She has
done a wonderful job, Darlene Williams, in making people
accountable within the office for the contracts that they are
charged with monitoring.
So this will be a priority for me, to make sure we are
actually getting bang for the buck and that we are also making
sure that the contract money is spent out to different vendors
who are able to perform the work.
Chairman Shelby. Ms. MacFarlane, you know where you are
going. You know you have been nominated by the President, and
you are accepting that job. You have a challenge over there as
far as PR. Would you share briefly some of your thoughts on how
you are going to improve the public perception.
Ms. MacFarlane. Chairman Shelby, I am very much in favor of
what I call transparency. I think it is very important for an
agency to show their hand, show their cards, and explain
exactly what every aspect of that means. I believe that if HUD
did that, that we could have the public understand a bit better
than they currently do some of the programs and the reasons for
the aspects of the programs that are currently being
challenged.
Chairman Shelby. You have a lot of experience, and you have
the confidence of President Bush, and you are going to have our
help everywhere we can give it to you because we want you to
succeed, all three of you to succeed.
Senator Sarbanes.
Ms. MacFarlane. Thank you, Senator.
Senator Sarbanes. Thank you very much, Mr. Chairman.
Mr. Chairman, I have a letter from Mayor Daley of Chicago
in support of Mr. Bernardi, and I would like to have that--
Chairman Shelby. It will be made part of the record.
Senator Sarbanes. And in part he says, commenting about his
work at HUD, he says he has ``worked in partnership with cities
such as Chicago to help us address many difficult issues,
including the creation of affordable housing, expansion of
economic development opportunities, and the reduction of
homelessness.''
Mr. Bernardi, I want to ask you about the Section 8
vouchers. It is the largest affordable housing program operated
by HUD. It consists of almost 2 million families, including
many children, elderly, and disabled people, in achieving
affordable and stable housing. Recently, HUD briefed our staff,
as well as a number of public housing authorities that
administer the voucher program, regarding the Department's
policy on renewing these vouchers in the current fiscal year,
the year we are in right now. And we understand, from a number
of the public housing authorities, that the proposed policy, if
finalized, may result in a number of people losing their
voucher and thereby losing their affordable housing.
Now, Congress, of course, when they passed the fiscal year
2004 HUD appropriations bill, it was clear that we intended
that every voucher in use should be funded and that nobody
should lose their assistance.
And Secretary Jackson was quoted in the Dallas Morning News
on April 15, as saying in response to these concerns expressed
by the public housing authorities, ``We are not going to remove
one person that is already on the Section 8 program.''
I have difficulty squaring the promise of Secretary Jackson
and the clear intent of the Congress, in enacting the 2004
appropriations legislation, with the apparent outcome of this
proposed policy. I am interested in how you can square them. I
am actually more interested in some commitment or understanding
that nobody is going to lose their affordable housing under the
Section 8 program.
Mr. Bernardi. Senator Sarbanes, the budget for 2004 is
$16.4 billion. As you indicated, through the Appropriations
Act, Congress mandated to us that that would be the amount of
money that we would use for the Section 8 voucher program, as
well as the project based.
That is a substantial increase every year. One of the
conditions that we have at HUD is that, in the 2004 budget,
about $23 billion of our $31 billion, goes to maintain assisted
rental housing. That is a significant increase and a
significant task for all of us.
Back in 1998, approximately a third of our budget was for
the Section 8 voucher program. That is now up over 51 percent.
In the 2004 budget, the public housing authorities, the 2,500
public housing authorities, are going to receive the amount of
money from their August 1, 2003 allocation, with a, as I
understand it--this is not my area--but as I understand it,
with a cost-of-living index added to that.
Our Budget people and our people in Public and Indian
Housing have indicated to us that no voucher will be lost, that
there will be sufficient resources to provide for the
individuals that are presently in the system.
Now, speaking as the Assistant Secretary for Community
Planning and Development, and trying to look at the big
picture, obviously, we would all like to spend--and I know
Senator Reed and I had this conversation on homelessness--and
we would all like to spend additional dollars, but it is going
to be very, very difficult.
And just jumping to 2005, if I may, Senator, we have
budgeted $16.9 billion and I remember, I believe, in your
statement that you indicated that that is $1.6 billion less
than what we would need. Well, that would take us to $18.5
billion. And the appropriators provide us with a set amount of
money. We have to live within those parameters. In this
particular case, in 2004, we are doing what the Congress
mandated us to do.
Senator Sarbanes. I am not clear from that answer whether,
in 2004, what is your response to these public housing
authorities that say they are going to have to cut back because
of the nature in which you are proposing to allocate the money?
Mr. Bernardi. Again, our numbers indicate that there are
sufficient dollars in the 2004 budget to meet the vouchers that
they presently have. Now, some housing authorities--and some
have--if they are overvouchering, if they are going out putting
additional people onto the list without paying attention to the
budget that they have to live under, we all have to live under
a budget, there are going to be some difficulties, obviously,
in certain areas, but as I understand it, there will be the
sufficient resources to provide for the vouchers through 2004.
Senator Sarbanes. Well, the Center on Budget and Policy
Priorities, which does good analytical work, estimates that
under HUD's interpretation, that you have given to the public
housing authorities, HUD will be left with almost $200 million
in unused fiscal year 2004 voucher funds at the very same time
that some public housing authorities will be forced to
terminate assistance.
Mr. Bernardi. If there is money----
Senator Sarbanes. I take it you are assuring me that that
is not going to happen; is that right?
Mr. Bernardi. What I can indicate to you, Senator, is that
if there are additional dollars left in the program, it is
because all of the vouchers have not been used. And I believe
Secretary Liu has indicated that we will look at housing
authority individually to see ways in which we can assist in
the event that there is a difficulty. But if they overvoucher,
if they go out, and they have 10,000 vouchers, and they offer
them to 12,000 people, then we are going to have a problem.
Senator Sarbanes. Well, they are authorized for a certain
amount of vouchers.
Mr. Bernardi. That is correct.
Senator Sarbanes. Are you going to provide the money for
the authorized amounts?
Mr. Bernardi. That is what we hope, that is what we plan to
do. That is what our budget indicates, but we cannot provide
dollars for vouchers that are not authorized. And in some
instances, and I think we understand some areas are going out
and issuing more vouchers than they have resources for.
Senator Sarbanes. Well, this is a very, very important
issue.
Mr. Bernardi. Absolutely.
Senator Sarbanes. And the Secretary himself is now quoted
as saying that no one is going to be cut off, we are not going
to remove one person that is already on the Section 8 program,
and we expect HUD to deliver on that.
You have the money to do it.
Mr. Bernardi. Each and every year, I believe, approximately
250,000 people are off of the program. So we do not anticipate
that anyone will be without a voucher who presently has one
this year.
Senator Sarbanes. Well, we are going to watch that very
closely. I wonder, Mr. Chairman, if I could ask one more
question.
Chairman Shelby. You go ahead.
Senator Sarbanes. As I mentioned in my opening statement,
we have had an ongoing problem with HUD in getting the data and
information we need to evaluate the Department's proposals and
budgets. There is no reason that I can see why a request from
many of our offices for data that the Department has readily
available should not be handled in a timely manner.
Now, on occasion, we use this data to actually criticize
the Department, it all depends, but we need the information in
order to have a rational dialogue, and discourse, and it does
not help anyone at HUD to be an obstacle to ensuring that we
have proper information on which to base decisions.
So, I am anxious to obtain from each of you a commitment to
work closely with the Committee and its staff so that these
requests for information are met on a more timely basis. It has
been a problem, and it ought not to be a problem. And if it
continues, it, of course, cannot help but contribute to
increased tension and worsening relationships between the
Committee and HUD.
Could I hear from each of you on this issue?
Mr. Bernardi. Sure, Senator. Secretary Jackson has
indicated to me, and I feel the same way--and someone mentioned
that I return my phone calls--I look forward to providing any
and all information that you need. Rest assured, however, that
if we give you information, we want it to be correct
information. We want to make sure that whoever provides us this
information, whether it is internally to HUD or outside, that
the information is valid, that the information is as accurate
as it can be, and then provide it to you.
Senator Sarbanes. Ms. MacFarlane.
Ms. MacFarlane. Senator, I would like to echo exactly what
Mr. Bernardi said, I too will work with you.
Senator Sarbanes. Mr. Shea.
Mr. Shea. Yes, Senator, I will echo what Cathy and Roy
said. I will work very closely with this Committee--if Jonathan
or Steve gives me a call I will return the call promptly.
Senator Sarbanes. We need the information too, along with a
return of the call.
Mr. Shea. I will work cooperatively. Sure; understood.
Senator Sarbanes. Mr. Chairman, thank you very much.
I want to say that Mr. Shea is another example, I think, of
the quality of the people that Senator Dole when he was Leader
had around him, and I think it is one of the reasons he had
such an effective leadership.
Ms. MacFarlane, you have done a nice job over at the
Federal Trade Commission. I am familiar with some of your work
there, and I wish you well at HUD. HUD has some good programs
and they should get out across the--I mean, the public housing
program, for example, is always taking a hit and getting
negative press, and yet in many communities across the country
there is very good public housing and it is meeting a very
important need. The same thing about the HOPE VI program which
gets some criticism. On occasion it may be deserved, but there
are cities in our country where the HOPE VI has helped to
actually transform the communities.
So we count on you to get this message out there. You were
very good at the FTC in getting the message out, so I hope you
will be able to do as well over at HUD.
Ms. MacFarlane. Thank you, Senator.
Senator Sarbanes. Mr. Chairman, let me just say I intend to
support these nominees and I welcome a hearing where we have
been able to start off on that premise in the beginning and
carry it all the way through.
Chairman Shelby. Quality nominees.
Senator Sarbanes. That is right.
Chairman Shelby. They are quality nominees. I think we know
that.
Senator Sarbanes. I agree with that.
Chairman Shelby. Senator Allard, thank you. And thank you
for the work that you and Senator Reed do in the housing area
on this Committee.
Senator Allard. Thank you, Mr. Chairman. I agree with
Senator Sarbanes that we do have a number of worthy programs
out there, but just like anything else, you have got a few bad
actors. We have businesses, say--I am a veterinarian. We have
got a few bad actors that tend to reflect negatively on the
profession. Physicians, lawyers, we all have our bad actors. I
think the challenge with HUD is being able to ferret out those
individuals that are not responsible and are not accountable.
You have come, Mr. Bernardi, out of a position where you
have had to hold people accountable. Have you had an
opportunity to think about things that you can implement in HUD
that would bring about more accountability in the process as a
Deputy Secretary?
Mr. Bernardi. Yes. The fact of the matter is that you can
always improve communication, that your correspondence can
always be crisper, if you will. The fact of the matter remains
that it is the relationship that you develop with the staff.
There are only a few of us. There are many career employees. I
encountered that same situation in the city of Syracuse. And
overwhelmingly those individuals are dedicated public servants
who want to do a good job. So the relationship that we need to
continue to develop with our deputy assistant secretaries and
our program directors in making sure that every program is
working at the maximum possible level.
The Government Performance and Results Act, Senator, that I
know that you are keenly involved with, at HUD we have a
strategic plan and we have an annual performance that we, each
and every year, provide information to the Congress as to how
we are doing with our strategic plan. Are we meeting our goals
and objectives? Because in the final analysis, that is how we
will be judged.
We also have program performance reports. Along with the
President's management agenda and the Results Act, as Deputy
Secretary, if I am so appointed--if I am so confirmed, I should
say, my goals and objectives are to make each and every office
there the best that it can possibly be.
The Chairman indicated about CDBG and performance results.
We need to drive our budget with performance. We need to
indicate to you when we come here, we are looking for resources
and programs that we would like to change, we have to be able
to provide you the necessary measurements so that you can
support what we would like to do. I look forward to that
relationship.
There are many, many challenges as Deputy Secretary. There
are over 300 programs at HUD and I am trying to get my arms
around most of them. I enjoyed CPD, and being Assistant
Secretary of that department was just absolutely wonderful,
dealing with the programs such as CDBG, HOME, the homeless
program, and the HOPWA program. Those are good programs. You
are able to bring happiness to the face of people around the
country.
But, sir, I look forward to managing with strong ethics,
making sure that everyone provides the necessary energy and
expertise that is needed.
Senator Allard. Mr. Shea, I think perhaps you were around
when they passed GPRA, the Government Performance and Results
Act. I have always liked the idea because it gives us an
opportunity as policymakers to look down very quickly and see
what is actually happening within the agency, and if the
programs are not working then it gives us an opportunity to go
back and visit with the agencies; what they can do to make
things better. Do you have any thoughts about GPRA and how we
measure and improve performance in HUD?
Mr. Shea. As you know, Senator, I am currently serving as a
consultant at the Department, and when I first walked in the
door, the first thing I picked up was the 5-year strategic plan
and the annual performance plan to read, to get my hands around
what the Department is doing, what it intends to do in the
future. I am pleased to say that PD&R, the office for which I
have been nominated, takes one of the lead roles in drafting
the Results Act, or GPRA, documents for the Department. We will
continue to do so, and I find a great utility in those
documents and in the Act.
Senator Allard. Ms. MacFarlane, I think you have a chore
here for public relations. I think that with the regional
offices you have an opportunity to reach out to communities and
work with public relations. But have you any thoughts on how
you can deal with some of the public relations issues as they
come up in HUD?
Ms. MacFarlane. Yes, Senator. I too have been a consultant
but have been able to observe what the regions talk about on
conference calls and the field offices. What I proposed to Mr.
Jackson is that when the assistant secretaries or Mr. Jackson
are traveling to an area on an invited opportunity, that we
extend the trip and we visit the communities where HUD has
placed money. We invite the press to visit those committees
with us, and then we hold town hall meetings afterwards so that
we can reach the community and let them know what opportunities
there are, along with some of the other partners in the
industry who also assist with low-income and moderate-income
housing.
Senator Allard. Mr. Chairman, I see my time has expired. If
I could just have a moment----
Chairman Shelby. Good ahead.
Senator Allard. --and I will be finished after the first
round here. I do not know what your plans are.
I am a strong supporter of helping people get into their
first home. I hope that you can strengthen those programs. I
think that we have some volunteer programs out there where you
build in sweat equity, where people build their own homes, by
volunteering their time. I hope that you will take time to try
and stimulate those kind of programs, and encourage them to
flourish. I have also worked and carried legislation called the
American Downpayment Act, which is to help people over this
downpayment hump that first-time homebuyers you run into. I
think it will be helpful too.
But again, I think those kind of programs have to be
monitored very closely and see that they are managed properly.
I would give you an opportunity to comment any further on those
programs if you want. If not, then we can just move forward.
Mr. Bernardi. I would like to say a few words, if I may.
The American Dream Downpayment program, there is $161 million
that is available. It is going to be going out the door this
month, as a matter of fact. President Bush signed that at HUD
and I believe you were there yourself, sir, back on December
16. That is to help first-time homebuyers. For the 2005 budget
we have a $200 million request. It is through the HOME program,
and Senator, as you indicated, HOME received a very high mark.
It is well-managed. It will go to the people that need it the
most. It will increase homeownership and give those people that
do not have the opportunity to own their home downpayment,
closing cost assistance. So I feel very good about that.
Our supportive housing opportunity program, our sweat
equity program, our SHOP program, in 2005 we are asking for $65
million. It is budgeted at $25 million here in 2004. I was with
some of the good Senators--Senator Reed, I guess I just missed
you here in Washington. We did the house that Congress built.
And to see the faces of these people that are going into those
homes.
Right now they are required to do 200 hours of sweat
equity. We are looking to lower that a little bit. The fact
remains it is very difficult for them to spend 200 hours on
their own home when they are building numerous homes. But with
Tom Jones with Habitat for Humanity and the Housing Assistance
Council, they receive the bulk of those dollars and we provide
anywhere from 2,200 to 2,500 homes for low-income individuals,
and it is a great program.
Senator Allard. Thank you, Mr. Chairman.
Chairman Shelby. I will call on Senator Reed. He has been
very patient and he knows a lot about housing.
If you are required to spend 200 hours on your own home and
you cannot do it, could there be some way they could help on
other homes and people would help them, as long as you get bona
fide credit?
Mr. Bernardi. Yes.
Chairman Shelby. Just a thought. I do not know.
Mr. Bernardi. They have indicated--they being Habitat and
the Housing Assistance Council, that that has been a very
difficult provision, and we are going to be reducing that to
100 hours, 50 hours for the husband or for the individual. They
do so many builds now where they do a number of builds at the
same time that that provision is very difficult to meet.
At the same time, because of an increase in costs over the
years, instead of $10,000 on a particular unit we are going to
be able to go up to $15,000. We would like to do that. I have
been working very closely with the individuals in those
organizations. They also would like us to take the SHOP
program, move it up earlier in the year so that we could grant
the awards in May and June as opposed to October and November
so they have the building season in front of them.
I tell you that to let you know that we are working to try
to improve that program and all of our programs.
Chairman Shelby. Thank you.
Senator Reed, thank you.
Senator Reed. Thank you, Mr. Chairman.
Secretary Bernardi, let me return again to the issue of
CDBG. Senator Sarbanes touched upon it. In the fiscal year 2005
briefing that you gave to staff you talked about the four
proposals developing for the formula, and the first indication
of changes that we received was back in the 2004 budget
submissions where there was some discussion without any details
really about perhaps changing. There was a sidebar that made
the comparison between Cleveland and three other cities and
said, Cleveland gets as much even though they seem to be in the
same category, which led many people to observe that there is
perhaps a movement to change formula B which relates to the age
of infrastructure and other factors, which is particularly
important to cities like Syracuse, Providence, Philadelphia,
Patterson, New Jersey, and other places.
First of all, do you have details on these four formula
proposals?
Mr. Bernardi. We are just in the process of completing the
study that PD&R has done in conjunction with CPD and with OMB's
input as well. You are correct, there is formula A and formula
B, and the entitlement community takes the one obviously that
provides the most amount of resources. That study will be
available, I believe, in a few months and we plan to provide
that. I cannot get into too much detail.
There are four alternates. Obviously with the 2000 census
there is an awful lot of change that has taken place over the
last 10 years, and I can candidly indicate to you that it is
not as targeted a program as it once was. So it will be up to
Secretary Jackson and the Administration to make a
determination as to whether or not to seek change to that
formula. There are four alternative proposals that I have
looked at in a rough draft. But then again, we are not going to
do this in a vacuum. We will make sure that every member, that
the entitlement communities, the States and any interest groups
that are out there have an opportunity to take a look at this
and give their input.
But any time you change a formula of that size, as you well
know, there are winners and losers. But we want to make sure, I
think, in the final analysis--I know Secretary Jackson does and
I feel very strongly on this--that we do it in a way that is
equitable and provides for the individuals that our programs
are geared to, and that is low- and moderate-income.
Senator Reed. I think you understand this is a vital
concern to everyone, both the potential winners and the
potential losers, so as soon as you can get those details I
would appreciate it and I assume my colleagues would also. We
will take you up on your invitation to work closely with you in
trying to look at these.
Mr. Bernardi. Happy to do it, Senator.
Senator Reed. I know OMB has rated the CDBG program is
ineffective, but it is not just--there is an implementation
problem that might be at the heart of it rather than a formula
problem, so I would hope you would look at that too.
Mr. Bernardi. With CDBG we are able to provide numbers for
number of units that are rehabilitated, and at the same time
number of jobs that are created. But rightfully so, OMB wants
to go deeper than that. They want to know if you are using that
money for public services, and public facilities, exactly who
does it benefit. As I mentioned earlier, working with the
communities and with ourselves we are going to put together
performance measurements. I believe there is $10 million within
the CDBG budget for 2004 for a demostration that will allow
communities to competitively utilize that money to create the
kind of system or systems that we are going to need to measure
progress.
Senator Reed. Thank you, Mr. Bernardi.
Mr. Shea, first of all let me say, Juliette expressed
feelings that we have all had at one time or another in this
room but we did not have the license to do it, and I am glad
she is here today. Congratulations.
Mr. Shea. Thank you very much.
Senator Reed. Your office just recently released a study,
Trends in Worst Case Needs For Housing, and it underscored that
the trends are getting much, much worse. The report indicated
that the number of renter households with worst case needs rose
by 210,000 to 5.7 million in 2001. In this great country that
is of concern to all of us.
The point I would make though is that this report typically
issues every 2 years, and we had to wait 3 years for this
recent report, so we only have 2001 data. I hope you can commit
to us that you would be to issue this report on the regular 2-
year basis.
Mr. Shea. Let me just say, Senator, that the report did say
that the percentage of individuals with worst-case needs in
1999 was the lowest ever recorded. There was a slight uptick
from 1999 to 2001, but statistically insignificant. But the
report did emphasize that there is a need for more affordable
housing.
Yes, I can commit that we will get a second or a follow-up
worst-case needs report out in the near future. I cannot commit
to you to a specific timeframe, but I know you expressed a
concern last year in getting the report out on a timely basis.
I can assure you that we will get it out on a timely basis for
more updated figures.
Senator Reed. Thank you, Mr. Shea.
Ms. MacFarlane, congratulations on your success at FTC. You
have an important story to tell at HUD, and as Senator Sarbanes
and my colleagues said, there are good things to tell and I
wish you well in telling that story.
Ms. MacFarlane. Thank you, Senator.
Senator Reed. Thank you, Mr. Chairman.
Chairman Shelby. I just want to tell all of you, you bring
a lot of experience, Secretary Bernardi, Mr. Mayor, your
experience at HUD. Mr. Shea, his experience in the Senate,
practice of law, working with the Majority Leader. Ms.
MacFarlane with the FTC. At HUD, you can make a difference over
there, and I believe you will. We are going to move these
nominations as soon as we possibly can, we assure you. We
congratulate all of you.
Mr. Bernardi. Thank you.
Ms. MacFarlane. Thank you, Mr. Chairman.
Mr. Shea. Thank you.
Chairman Shelby. The hearing is adjourned.
[Whereupon, at 3:20 p.m., the hearing was adjourned.]
[Prepared statements, biographical sketches of nominees,
response to written questions, and additional material supplied
for the record follow:]
PREPARED STATEMENT OF HILLARY RODHAM CLINTON
A U.S. Senator from the State of New York
April 21, 2004
Thank you very much, Mr. Chairman. I am very sorry I was not able
to personally attend this hearing to endorse the nomination of Roy
Bernardi to Deputy Secretary at the U.S. Department of Housing and
Urban Development. Two years ago, I had the pleasure of appearing
before this Committee to support his appointment as Assistant Secretary
for Community Planning and Development and I am happy to say that he
met my highest expectations.
Roy Bernardi has truly dedicated his career to public service. For
the past 30 years, he has worked to improve the overall management of
the Government while ensuring the delivery of much needed services.
From his start as elected City Auditor, to his two-terms as Mayor of
Syracuse, and his service as the President of the New York State
Conference of Mayors, Mr. Bernardi has championed improving the quality
of life of New Yorkers. His experiences in New York made him uniquely
qualified to serve as the Assistant Secretary for Community Planning
and Development of HUD, where he provided strong leadership and worked
to improve the delivery of important HUD services to communities
throughout our Nation. He has been a strong supporter of providing
Federal assistance to the many financially strapped municipalities in
our Nation that depend on CPD programs, which provide funding for
community and economic development, homeless assistance, and housing
for people with AIDS.
In New York, I have had the pleasure of working closely with
Assistant Secretary Bernardi to provide HUD assistance to many of the
distressed cities in Upstate New York, to improve communication between
Federal, State, and local government on behalf of HUD empowerment zones
and renewal communities in our region and to deliver vital HUD funding
to help rebuild Lower Manhattan. I admire Roy because he has always
brought people together to work on behalf of community-based solutions
and has always helped people seek a better life for themselves and
their children. One example of his extraordinary leadership that comes
to mind is when
Assistant Secretary Bernardi went out of his way to convene a special
meeting of renewal communities in Upstate New York, in March 2002. He
spent the entire day working closely with mayors and local community
development officials to help them fully understand the benefits of a
Federal renewal community program. Over one hundred and fifty people
attended this hands-on session and the results have proven to be
invaluable.
I am convinced that his experience as Assistant Secretary for
Community Planning and Development, coupled with his impressive record
as a public servant of Syracuse, has prepared him to serve as Deputy
Secretary of HUD. I commend the President for the selection of this
nominee and highly recommend him to this Committee, and ask that you
act favorably on his nomination.
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RESPONSE TO A WRITTEN QUESTION OF SENATORS SHELBY AND SARBANES
FROM ROMOLO A. BERNADI
Q.1. Do we have your commitment that HUD will provide all
information requested by any Member of the Committee regarding
program operations, management, and other information relevant
to the Committee's oversight activities, as soon as such
information is available, without delay?
A.1. Yes, you have my commitment.
RESPONSE TO WRITTEN QUESTIONS OF SENATOR REED
FROM ROMOLO A. BERNADI
Q.1. In July 2002, then-Deputy Secretary Jackson testified at a
Housing Subcommittee hearing I chaired regarding attempts to
improve HUD management. And in response to my written questions
from his nomination hearing, Secretary Jackson elaborated on
the progress of HUD's management initiatives. However, most of
these initiatives were enacted in 2002, but in the January 2003
report from the U.S. General Accounting Office (GAO) on HUD
management, Major Management Challenges and Program Risks (GAO-
03-103), GAO was still concerned that important management
challenges have not been fully addressed. To quote from its
2003 report: ``many of HUD's strategies for resolving problems
in its high-risk program areas represent new initiatives in
early stages of implementation, and evidence shows that
significant problems remain.''
<bullet> Beyond the HUD management initiatives enacted in 2002
that Secretary Jackson cited in his written response to my
question for his nomination as Secretary, what are your
plans to address HUD's management challenges, if you are
confirmed? Please elaborate.
A.1. HUD needs to continue to improve the management of its
human capital, information systems, and acquired services in
order to improve the delivery and results of its core programs,
particularly the high-risk rental housing assistance and single
family mortgage insurance programs. The President's Management
Agenda (PMA) is addressing HUD's management challenges and
high-risk programs through five governmentwide initiatives to
improve Government performance, a sixth HUD-specific initiative
to correct HUD program weaknesses, and a seventh initiative to
improve HUD's program delivery by enabling increased
participation by faith-based and community organizations.
HUD's major management challenges and high-risk program
areas are longstanding issues requiring sustained effort to
address. A discussion of the nature and plans on each of the
PMA initiatives addressing the HUD management challenges and
high-risk program areas identified by GAO follows below. If
confirmed as Deputy Secretary, I will make, as my highest
priority, implementation of the comprehensive corrective action
plans HUD has put in place to address these important issues.
At the same time, it is important to stress that the efforts
made to date under the leadership of Secretary Alphonso Jackson
have already yielded significant results.
Strategic Management of Human Capital. This PMA initiative
is directed at improving HUD's most important asset, its
``human capital.'' Significant steps have been taken to better
utilize HUD's existing staff capacity and obtain, develop, and
maintain the capacity necessary to adequately support HUD's
future mission-critical program delivery. A 5-Year Human
Capital Management Strategy has been developed with
implementation plans to ensure that: HUD's organizational
structure is optimized; succession strategies are in place to
provide a continuously updated talent pool; performance
appraisal plans for all managers and staff link to HUD's
mission goals and objectives; skills gaps are assessed and
corrected; and human capital management accountability systems
are in place to support effective management of HUD's human
capital.
As Deputy Secretary, I would strive to complete and support
the workforce analyses and planning process to address critical
staffing and skill gaps in HUD's core program areas and
occupations. Addressing those gaps would be accomplished
through targeted training and development, controlled hiring,
and realignment where necessary.
Expanded Electronic Government and Financial Performance.
While HUD is pursuing increased electronic commerce and
actively participating in governmentwide ``e-Gov'' projects,
this PMA initiative is also focused on more fundamental, HUD-
specific needs to: Improve the information technology (IT)
capital planning process; complete a systems modernization
blueprint or enterprise architecture to guide future systems
development; convert to performance-based IT service contracts
and strengthen IT project management to produce better results;
and provide a secure systems environment for all platforms and
applications. In addition, HUD is continuing its efforts to
improve financial performance and eliminate material
weaknesses.
HUD has already established measures for tracking its
participation and performance on fifteen major e-Government
projects that support PMA objectives to simplify the delivery
of services to citizens, enable the agency's business processes
to be more efficient, and reduce costs through integration and
elimination of redundant systems.
It has received an unqualified or ``clean'' audit opinion
on HUD's consolidated financial statements for the last 4
consecutive fiscal years (2000-2003), and it has reduced the
number of material weaknesses from 5 to 3 to 2 over the past 3
years, with plans to eliminate the remaining 2 in fiscal year
2005 and fiscal year 2006.
Having served as a HUD program Assistant Secretary, I would
serve as Deputy Secretary to improve program management
participation in IT investment decisions and project management
to better assure HUD's IT systems efficiently and effectively
fulfill the information needs of HUD programs and program
participants. Completing the HUD Integrated Financial
Management Improvement Project (HIFMIP) to better manage HUD
financial systems projects and fulfill unmet financial
reporting and internal control needs would be one of my
priorities.
Improved Acquisition Management. HUD acquires over $1
billion in contracted services and goods each year. As part of
an overall strategy to improve HUD's acquisitions management,
actions are being taken to ensure that HUD's centralized
contracting management information system contains reliable
data on the number of active contracts, the expected cost of
the contracts, and the types of goods and services acquired,
and that its financial management information systems provide
complete and reliable obligation and expenditure information on
HUD's contracting activities across the Department. Other
aspects of HUD's acquisitions management improvement strategy
are being addressed through the human capital management
strategy, which incorporates actions to enhance HUD's
procurement staff capacity and improve guidance and training
for HUD's acquisition officials. Given the significance of
contracted services to the delivery of HUD programs, improving
HUD's procurement capacity and acquisition management skills
and information systems would be among my highest priorities as
Deputy Secretary.
Reduced Rent Subsidy Overpayments. HUD has developed a
comprehensive plan for reducing the estimated $2 billion in net
annual rental housing assistance overpayments. Establishing an
adequate field monitoring capacity, with provisions for
improved guidance, training, staffing, and action on monitoring
results, is a key component of the strategy. Significant
actions to date include: The Office of Public and Indian
Housing's (PIH) conduct of over 700 Rental Integrity Monitoring
(RIM) reviews at PHA's managing over 80 percent of PIH funding;
PIH implementation of the Upfront Income Verification (UIV)
System using State wage data; and the Office of Multifamily
Housing's increased monitoring through the expanded use of
Performance-Based Contract Administrators (PBCA's). These
actions contributed to an estimated 30 percent reduction in the
rental assistance payment errors attributed to program
administrator performance in fiscal year 2003. The recent
Congressional enactment of HUD's legislative proposal for
increased computer matching and data-sharing authority to allow
upfront verification of tenant income in all rental assistance
programs has the potential to reduce the estimated payment
error by over one-half. As Deputy Secretary, effective
implementation of this new computer matching authority would be
among my highest priorities.
Improved FHA Risk Management. Several new risk management
rules have been completed or proposed to protect both the FHA
fund and homebuyers from predatory lending practices like
property flipping. Under the new ``Appraiser Watch'' process,
appraisers with poor performance records are now automatically
targeted for monitoring, or even disqualified from program
participation, when they hit unacceptable performance
thresholds. FHA is also implementing a measure of the
effectiveness of its targeted compliance monitoring efforts,
which are proving to be more effective in identifying problems
and protecting FHA through increased indemnifications and
sanctions. FHA's new automated underwriting system, the
Technology Open To Approved Lenders (TOTAL) Scorecard, will
improve the automated underwriting process to increase lender
efficiency and decrease losses to the FHA fund through more
consistent, objective evaluations of the credit worthiness of
borrowers, and better integration of the automated underwriting
systems usage into FHA's existing processes and workflow. FHA
also believes that the objectivity and broad availability of
the TOTAL Scorecard will increase homeownership opportunities
for minority families. As Deputy Secretary, I will continue to
pursue efforts to reduce FHA's financial risks while promoting
increased homeownership goals for first-time and minority
homeowners and other underserved areas.
Q.2. President's Management Agenda highlights ``strategic
management of human capital'' and ``electronic government''
(encompassing improved information systems) as 2 of 5
governmentwide reform initiatives. The President's Agenda also
includes a specific initiative regarding HUD management and
performance, citing among other things ``weak information
systems and controls, staff misallocation, and the retirement
of many experienced employees.'' The GAO and many housing
groups have indicated that HUD's information technology systems
continue to have severe problems, despite additional
Congressional appropriations provided specifically to correct
HUD's deficiencies.
<bullet> What are your plans to correct these information
system deficiencies? Please elaborate.
A.2. The bottom line is this: HUD has to improve its IT
systems. The Department has to ensure that the diverse
operating platforms can talk to each other. Data has to be
accessible and managers have to be able to use it in a timely
and efficient manner. Important steps have been taken that I
will influence, if confirmed. For example, HUD has made
important progress in implementation of an Enterprise
Architecture (EA) program and the Capital Planning and
Investment Process (CPIC). These two initiatives help ensure
that information systems are in alignment with HUD's business
and that systems are reviewed and approved based on cost,
schedule, and performance.
The EA program has developed a target architecture that
serves as a blueprint for modernization of HUD systems in the
future. The EA program now reviews all requests for information
technology services.
HUD'S CPIC process governs decisions on the use of the
Working Capital Fund by selecting investments to receive
funding, tracking the achievement of project cost/schedule/
performance goals through quarterly control reviews, and
evaluating the success of the investments through post-
implementation reviews.
Both of the above programs are helping direct better
investment decisions for HUD and are leading to more efficient
and effective delivery of information technology systems.
Q.3. The GAO's November 2002 report, HUD Management: Actions
Needed to Improve Acquisition Management (GAO-03-157), March
2004 report, HUD Single-Family and Multifamily Property
Programs: Inadequate Controls Resulted in Questionable Payments
and Potential Fraud (GAO-04-390), and a number of other GAO and
HUD Inspector General Reports have clearly demonstrated that
HUD relies heavily on contractors to carry out its programs,
and it is essential that these contractors are held accountable
by HUD for their performance. These previous reports have shown
how deficiencies in these areas--the lack of properly trained
and equipped staff, poor information systems, and insufficient
oversight of contractors--negatively affects the performance of
HUD programs.
<bullet> What are your plans to improve oversight of HUD
contractors? Please elaborate.
A.3. Because we are improving our information systems, because
managers are better trained and because Secretary Jackson has
made this a priority for himself, HUD is taking the right steps
to improve oversight of HUD contractors. HUD now uses and
enters contractor performance data in to the National
Institutes of Health Contractor Performance System (CPS)
Implementation and training was completed in early 2003.
In December 2003, HUD implemented the HUD Procurement
System (HPS) Version 3.6 which addressed GAO recommendations.
HUD established, in early 2004, an Acquisition Workforce
Council (AWC) that will focus on training and development of
HUD's acquisition workforce.
As indicated in my comments on acquisition management in
response #1, the Department is making significant progress to
ensure that HUD's centralized contracting management
information system contains reliable data on the number of
active contracts, the expected cost of the contracts, and the
types of goods and services acquired, and that its financial
management information systems provide complete and reliable
obligation and expenditure information on HUD's contracting
activities across the Department.
Further, the Department has taken strong action to deal
with HUD IG and GAO concerns about management of single and
multifamily housing.
Multifamily Housing: On February 27, 2003, the HUD
Multifamily Property Disposition oversight contract with
Management Solutions of America Inc. (MSA) was modified to
require additional monitoring of work completed by HUD's
Property Management contractor.
Specifically, this modification requires that, prior to a
site visit, the Oversight Contractor (currently MSA) generate a
report listing all purchaser orders and contracts issued for
the site over the previous 6 months. The Oversight Contractor
will select a sample of 15 percent of these actions on which to
review invoices as follows: (1) 5 percent of those actions
issued in the previous 30 days but not yet shown as paid for
the type of work that, in the judgment of the contractor is
likely to be still going on; (2) 5 percent of those actions
issued in the previous 90 days and shown as paid; and (3) 5
percent of those actions issued during the first 90 days of the
6-month period.
The actions selected shall be for varying types of
requirements (including supply purchases), varying dollar
levels, and varying vendors. The Oversight Contractor shall
then request the property management contractor to provide, via
overnight mail, copies of the invoices where they have been
received, relevant contract documents, and evidence of
competition (or justification as to why
competition was not obtained) if the purchase order is over the
micropurchasing level. The contractor will not include major
construction projects in the sample as that work is inspected
by HUD's architectural and engineering contractors.
Once on-site, the Oversight Contractor will, for actions
where the invoices have been processed, compare the item bought
against the associated contract document (with specifications)
and invoice to ensure that what was purchased per those
documents was received. For actions/orders where the work is
still on-going, the contractor shall review the work against
the contract document (with specifications) and determine if
work is being performed as procured. The Oversight Contractor
will take at least one digital photograph of each work product
reviewed and additional digital photographs as needed to
illustrate problems identified by the contractor during its
review.
Also, while on-site, the Oversight Contractor shall review
the site's rotation lists for purchases of less than $2,500 and
provide written comments as to the adequacy of those lists for
the area in which the site is located and kinds and volume of
purchases being made.
The Oversight Contractor will identify in its written
report the results of its entire site visit, which actions were
reviewed, and any problems identified with those actions. The
contractor shall also identify any situations where it appears
the PM contractor placed repetitive purchase orders in order to
avoid HUD approval levels set forth in the PM Contracts.
The MFPD Centers have been routinely requiring the
Oversight Contractor (MSA) to follow the revised scope of work
as outlined above since it was approved on February 27, 2003.
Single Family Housing: For single family housing, the
current Management and Marketing (M&M) contracts expire July
31, 2004. The Department is currently in the process of
awarding new performance-based contracts to manage, market, and
sell its single family properties throughout the United States
owned by or in the custody of HUD. Award on these contracts are
expected by July 2004. Contract requirements include a
provision to allow electronic monitoring of the contractors
working files, as well as on-site and physical property
inspections.
Staff training on management controls over the Management
and Marketing (M&M) contractors is scheduled for June 15-17,
2004 for HUD Real Estate Owned staff, both in headquarters and
at the four Homeownership Centers (HOC's). The purpose of the
training is to provide direction to the HOC and headquarters'
staff on improved monitoring responsibilities involved with the
implementation of the new M&M contractors. The core issues to
be discussed are: Contract administration (which includes
start-up related activities, transition activities, GTR
approval standards and procedures requiring GTR action and
review); contract monitoring and management controls; systems
controls and access; financial controls on disbursements, sales
closings and collections; and regulations and notices.
The Department is currently in the process of procuring for
the services of property maintenance of the occupied 203k
properties in New York City. HUD previously terminated the task
order with ARCO for these services, and hired NHG (National
Housing Group) on an interim 8a sole source contract, whose
options run out in September. A revised performance-based
statement of work will be issued prior to June 2004.
A contract which provides expanded financial support
services to the four HOC's will be awarded by September 2004.
This contractor works closely with the HOC REO staff that
monitors activities conducted by HUD's M&M contractors and
closing agent contractors, including monitoring of
disbursements made for pass-through expenses, monthly
contractor fees, and real estate property taxes, and
researching and resolving inconsistencies resulting from sales
closings, as necessary. The reprocurement will be one
competition for four separate 8a set-aside contracts for each
of the HOC's.
In addition to the above training, a contractor was hired
by the Office of Single Family Asset Management to review and
analyze its procedural functions. The Real Estate Owned
operation was reviewed in each of the four HOC's, headquarters,
and the National Servicing Center in Oklahoma City, OK. The
staffing allocated to the Real Estate Owned operation and the
internal control procedures necessary for the Office of Single
Family Asset Management to maintain programs and procedures to
protect the integrity of the FHA mortgage insurance funds, as
well as achieving its program objectives, were reviewed by this
contractor. The contractor will provide the Office of Single
Family Asset Management with a final report which will contain
its findings and recommendations for improvement, if necessary,
in functional, staffing and/or internal control areas. The
final report is due in June 2004.
HUD recently awarded a contract to conduct operational,
management, and performance reviews of each of the current M&M
contract areas and any subsequently awarded M&M contract areas,
including a consolidated review of each M&M contractor of those
contractors having multiple areas. The purpose of these reviews
is to analyze and assess the performance of the M&M
contractors. The reviews will be conducted at all M&M office
locations on a monthly basis. The contractor will develop and
maintain a risk-based methodology for selecting on-site reviews
of M&M contractor compliance, with property specific and
overall program support
activities that includes a statistically valid file/item
sampling methodology. The contractor will perform a monthly
review of all relative activities performed by all of the M&M
contractors and report its findings to the respective HOC and
headquarters. The contractor will also maintain a national web-
based database file previously developed for and owned by HUD
that is compatible with HUD's current operating environment
that can be used to perform detailed analysis of the results of
the reviews at various levels of risk. A monthly risk analysis
report will be furnished to headquarters and the respective HOC
on the M&M contractors
reviewed that summarizes the current performance of the M&M
contractors for each area of risk.
Q.4. Secretary Jackson has informed me that HUD and the
Association of Federal Government Employees (AFGE) have agreed
in principle to a student loan repayment program to address
HUD's strategic human capital needs, but had not funded it. He
also mentioned that the program is in departmental clearance.
<bullet> In light of the fact that many Federal agencies and
the Senate have successfully implemented and funded student
loan repayment programs, why has HUD not allocated funds
for its proposed student loan repayment program to address
the need HUD has itself identified as a significant part of
its strategic human capital needs? Please elaborate.
<bullet> Is the proposal still in departmental clearance? When
can it be expected to be approved? When can we expect to
see it fully funded? Please elaborate.
A.4. The Department believes that a student loan repayment
program is an important component of its human capital needs
strategy. HUD'S Student Loan Repayment Policy has completed the
departmental clearance process. Comments are being reviewed
currently. Comments will be shared with AFGE. Upon agreement
HUD will prepare a supplement to the AFGE agreement and will
insert Student Loan Repayment Policy into the HUD handbook.
Three hundred fifty thousand dollars has been identified
for fiscal year 2004 to support this program.
Q.5. As a part of its HUD's strategic human capital planning,
it implemented the Resource Estimation and Allocation Process
(REAP) to determine appropriate staffing levels, and followed
that initiative with periodic Total Estimation and Allocation
Mechanism (TEAM) measurements of staffing needs.
Q.5.a. To what extent has HUD implemented and used the results
of REAP and TEAM to determine staffing levels and locations?
A.5.a. Both REAP and TEAM have been implemented. REAP
establishes a staffing baseline that is used for budget
formulation and execution, strategic planning, and management
and organizational analyses. TEAM validates the REAP baseline
on a regular basis by capturing and reporting actual workload.
REAP and TEAM were the underlying systems used to develop
the staffing requests in the fiscal year 2003, 2004, and 2005
Budgets and was the basis for the fiscal year 2002-2004
staffing plans. REAP is now used by the Appropriations
Committees to allocate workyears and associated funding by
Office in HUD's Appropriation Acts.
Q.5.b. What factors, if any, impede application of this
process? How accurate is REAP and TEAM in its estimation of
actual staffing needs?
A.5.b. There are no impediments to REAP and TEAM, but both must
be updated on a regular basis to reflect organizational
changes, changes in program content, and the implementation of
the Strategic Plan. The original REAP baselines were developed
in 2000-2001. HUD is currently completing the first round of
updates of the original studies. This update covers
approximately 80 percent of the Department's FTE's. The
remaining programs will be restudied by the end of this
calendar year. REAP ``refreshes'' will be conducted
approximately every 2 years for every HUD program or sooner if
required by changes in programs, functions, processes, or
organizational structure.
REAP establishes a baseline of staffing needs based on
current program requirements; TEAM measures actual staff usage
and work performed and compares them against the REAP baseline
by function, location, and programs for possible adjustment or
updating. To date, TEAM reports demonstrate that REAP estimates
of workload are accurate to within the 95 percent confidence
limits. This result validates the accuracy of the methodology
developed by HUD and the National Academy of Public
Administration (NAPA).
Q.6. In response to my question regarding funding the
commitment to end chronic homelessness and the Samaritan
Initiative, then-Acting Secretary Jackson stated that the
Administration has provided sufficient resources to meet the
commitment. However, in order to meet the goals the
Administration has set, the budget for supportive housing would
have to be $100 million a year ($1 billion over the decade) to
fund 15,000 units a year (150,000 a year). The Samaritan
Initiative is authorized and proposed to be funded at $50
million a year.
<bullet> How do you reconcile those numbers? Please elaborate.
A.6. The Samaritan Initiative will be a dedicated program
targeted to the chronically homeless. HUD proposes $50 million
for Samaritan to provide permanent housing for this population.
It is important to note that Samaritan is by no means the only
resource that will be used to end chronic homelessness. In
addition to the Samaritan Initiative, HUD's proposed
consolidated homeless assistance program, requested at a 2005
funding level of $1.282 billion (including $25 million for the
proposed ``Prisoner Re-entry'' program), will be a significant
resource in ending chronic homelessness. Communities will be
able to tap into these funds to house chronically homeless
persons. In addition to the targeted homeless assistance
programs, communities will be able to use HUD's mainstream
housing programs (including HOME, Section 8, and public
housing) to help end chronic homelessness. Finally, HUD is not
the only housing resource that communities will tap to achieve
this important goal. Resources from States, localities, and
organizations committed to providing affordable housing, such
as Fannie Mae, will also be used to end chronic homelessness.
RESPONSE TO A WRITTEN QUESTION OF SENATORS SHELBY AND SARBANES
FROM DENNIS C. SHEA
Q.1. Do we have your commitment that HUD will provide all
information requested by any Member of the Committee regarding
program operations, management, and other information relevant
to the Committee's oversight activities, as soon as such
information is available, without delay?
A.1. Yes, you have my commitment.
RESPONSE TO WRITTEN QUESTIONS OF SENATOR REED
FROM DENNIS C. SHEA
Q.1. The first major report of the year from the office you are
nominated to head, HUD's Office of Policy Development and
Research, was ``Trends in Worst Case Needs for Housing,'' which
documents the significant challenges that too many of America's
working families experience in finding an affordable place to
live. It states, ``Worsening shortages of housing affordable
and available to extremely low-income renters . . . show that
the underlying gap between demand and supply continues.'' The
report indicates that the number of renter households with
worst case needs rose by 210,000 to 5.07 million in 2001, and
that ``there were only 42 units affordable and available for
every 100 families with extremely low-incomes,'' an astounding
deficit of almost 5 million units. In my own State of Rhode
Island, one of every two renters is unable to afford the two
bedroom HUD Fair Market Rent levels.
Furthermore, the gap between demand and supply is going to
increase. Based on the most recent Census data, demographic
trends indicate that the United States will grow by 30 million
households by 2025 and at the current annual rate of the loss
of units, we will lose another 15 million units also by 2025.
Combined with the 5 million deficit indicated by the Worst Case
Needs report, this means that we will need to build at least 50
million units by 2025--almost 2.5 million units a year--just to
keep up with demand. We are not building at that rate,
especially for rental housing affordable for low-income and
minority families.
In light of these trends, what policy development and
research initiatives do you believe are important to address
the upcoming demand for housing, especially regarding rental
housing for low-income and minority families?
A.1. As you point out, HUD's ``worst case needs'' reports have
historically highlighted the need for a greater supply of
affordable housing for low-income households. In the future,
this overall need will be compounded by the unique challenges
of meeting the housing needs of the elderly, who will make up a
larger portion of the population, as well as the disabled and
the homeless.
The latest ``worst case needs'' report released by the HUD
Office of Policy Development and Research indicated that the
percentage of households with worst case needs in 1999 stood at
4.72 percent, the lowest percentage ever recorded. While this
percentage increased slightly to 4.77 percent in 2001, the
latest ``worst case needs'' report indicated that this increase
was not statistically significant. Since 1977, the percentage
of U.S. households with ``worst case needs'' has hovered around
5 percent, with the highest percentage recorded in 1983 (6.03
percent).
Working closely with the private sector and our State and
local partners, the Federal Government clearly has an important
responsibility to help respond to the need for more affordable
housing. PD&R is uniquely positioned to assist in this effort
by providing sound research and objective information to guide
policymakers in their decisionmaking. Historically, PD&R has
achieved this mission by examining housing and demographic
trends through surveys and reports, including ``worst case
needs'' analyses and funding for the American Housing Survey.
We intend to continue this legacy through an aggressive
research agenda that is tightly focused on key housing issues
with high policy relevance. Some of our current research
priorities include:
<bullet> Affordable Housing. PD&R has a number of projects
underway or under consideration that will examine ways to
expand affordable homeownership and rental opportunities.
These include support for the goal of ending chronic
homelessness in 10 years; studying ways of closing the
minority homeownership gap and creating 5.5 million more
minority homeowners by 2010; and critical support to FHA in
the operation of its single family and multifamily
insurance programs, including the introduction of new
products to expand affordable housing opportunities.
<bullet> Program Evaluations. Improving the operation of HUD's
current programs is a key PD&R priority. Examples of
current and proposed program evaluations include improving
the delivery of Section 202 and Section 811 housing and
evaluating the formulas for distributing HOME and CDBG
funding. PD&R plays a key role in monitoring and evaluating
the Low Income Housing Tax Credit program and will continue
to do so, if I am confirmed.
<bullet> Reducing Regulatory Barriers. Working with HUD's
Affordable Communities Initiative, PD&R is helping States
and communities to reduce regulatory barriers that increase
the cost of housing without improving the value to the
residents or to their communities. By working
collaboratively with developers and community groups,
communities will be able to reduce delays and unnecessary
costs, which constitute a barrier to affordable housing.
<bullet> Housing Technology. PD&R's Division of Research and
Technology has helped shine the spotlight on innovative
technologies that not only make American housing safer and
more durable, but also more affordable. In addition, PD&R
is sponsoring continuing research to improve the quality of
manufactured housing.
Finally, to remain effective, PD&R needs the continuing
support of Congress to provide funding for research and program
evaluation.
I look forward to working together with you and the other
Members of the Senate Banking Committee to expand opportunities
for affordable housing. If confirmed, I hope to elevate PD&R's
role in ensuring that the Department's policy decisionmaking
process is informed by sound research. You have my assurance
that, if given the opportunity to lead PD&R, the Office will
continue to make affordable housing, particularly housing for
low-income households, a key focus of its research and policy
development efforts.
Q.2. In early April 2004, HUD released proposed new affordable
housing goals for Fannie Mae and Freddie Mac, based largely
upon recommendations and data from HUD's Office of Policy
Development and Research.
Q.2.a. Do you believe that these proposed goals are rigorous
enough to help address the need for affordable housing in many
of the high housing cost communities across the Nation? Why or
why not?
A.2.a. The Department is proposing higher goals than those in
effect for 2004, and yes, I believe that the proposed goals are
rigorous enough to help address affordable housing problems in
all communities across the Nation. HUD's proposed higher
housing goals for Fannie Mae and Freddie Mac for the 2005-2008
period were published in the Federal Register on May 3, 2004.
Specifically, HUD is proposing to raise:
<bullet> the low- and moderate-income goal from 50 percent in
2004 to 52 percent in 2005, 54 percent in 2006, 56 percent
in 2007, and 57 percent in 2008;
<bullet> the special affordable goal from 20 percent in 2004 to
22 percent in 2005, 24 percent in 2006, 26 percent in 2007,
and 28 percent in 2008; and
<bullet> the underserved areas goal from 31 percent in 2004 to
38 percent in 2005, 39 percent in 2006 and 2007, and 40
percent in 2008. A portion of the proposed increase in the
underserved areas goal between 2004 and 2005 reflects the
incorporation of data from the 2000 census on the
prevalence of underserved (low-income and/or high-minority)
areas.
In addition, HUD is proposing to establish home purchase
subgoals for the GSE's to increase homeownership among American
families, especially lower-income families and families in
underserved areas.
In the past, the GSE's have generally lagged the market in
funding mortgages for families in owner-occupied and rental
properties targeted by the housing goals. In 1992, Congress
said that one factor that HUD should take into account in
setting the goals was the ability of the GSE's to lead the
market, and the Department has done so in proposing the goals
for 2005-2008. That is, the Department has proposed to increase
the goals in steps, so that by the year 2008 the goals are set
at the upper end of the estimated range of the goal-qualifying
shares of mortgages originated in the primary mortgage market.
HUD is confident that the higher national housing goals
proposed for the post-2004 period can only be met by GSE
support of affordable housing in all parts of the country,
including communities with high housing costs. I support the
Department in this effort and believe that the proposed goals,
if implemented, will help respond to the need for affordable
housing in these communities.
Q.2.b. On Monday, April 19, at the Mortgage Banking
Association's Secondary Market Conference, representatives from
Fannie Mae and Freddie Mac alleged that HUD's proposed goals
were too rigorous, and may even force them to reduce annual
purchases of moderate or high-income mortgages.
Do you think there is any merit to Fannie and Freddie's
argument that the proposed goals may be too rigorous? Why or
why not?
What effect, if any, do you think that the proposed goals
will have on the purchases of moderate or high income
mortgages? Please elaborate.
A.2.b. HUD has undertaken detailed analyses of the primary
mortgage market and presented the results of such analyses in
Appendix D of the proposed rule for 2005-2008 and in the
regulatory analysis accompanying the proposed rule. These
analyses demonstrate that there are many mortgages in the
categories targeted by the housing goals that have not been
purchased by the GSE's in the past. There have been ample
opportunities for both Fannie Mae and Freddie Mac to increase
their purchases of targeted loans and improve their overall
goal performance. And projections indicate that there will be
an ample number of such mortgages in the period covered by the
proposed rule. Thus, there should be no need for the GSE's to
curtail their purchases of mortgages for higher-income families
or families living outside of underserved areas, as defined by
the Department. The Department's regulatory analysis also
demonstrates that the GSE's have earned a high return on equity
(ROE) on their purchases of both targeted and nontargeted
mortgages. This suggests that they will not be curtailing their
regular business in order to meet the housing goals.
Q.2.c.1. Unlike every other goal established by HUD, which are
proposed to be increased over the course of the next 4 years,
the Special Affordable Housing Multifamily Goal is set at 1
percent of Fannie and Freddie's volume of mortgage purchases.
Do you think it is appropriate to have the multifamily goal
able to be changed, as are the other housing goals? Why or not?
A.2.c.1. HUD has increased the minimum multifamily special
affordable subgoal several times in the past. For Fannie Mae,
the subgoal was $1.29 billion annually for 1996-2000 and $2.85
billion annually for 2001-2004, and the Department is proposing
to raise this subgoal to $5.49 billion annually for 2005-2008.
For Freddie Mac, the subgoal was $0.99 billion annually for
1996-2000 and $2.11 billion annually for 2001-2004, and the
Department is proposing to raise this subgoal to $3.92 billion
annually for 2005-2008. Thus, for both GSE's the proposed
subgoals for 2005-2008 are approximately four times the
subgoals that were established for 1996-2000. These changes
have been made in order to reflect the overall growth in the
multifamily mortgage market and the increased capacity and
expertise of both GSE's in purchasing multifamily mortgages.
Q.2.c.2. Should the multifamily goal be set as percentage of
volume or as a specific dollar amount? Why or why not?
A.2.c.2. As discussed in Chapter 3 of the regulatory analysis,
HUD has considered alternative formulations of this subgoal,
but has set it in terms of a minimum dollar volume of such
mortgage purchases. Comments were invited regarding
alternatives in the 2000 rule, and commentors generally
supported the dollar-based approach followed in the past by the
Department.
The Department believes it would not be feasible to
establish these subgoals as a percentage of all units currently
financed by the GSE's, because their total mortgage volume
varies greatly between years, especially when refinance waves
take place in the single-family mortgage market, as seen in the
past few years. I share the Department's view that the dollar-
based subgoals have helped ensure that the GSE's play at least
a minimal role in the special affordable portion of the
multifamily mortgage market.
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