1 Quoted in Ann Mariano, "Housing Activists View Cisneros as Advocate for Change,'The Washington Post, December 26, 1M.

year has promoted its own $35 billion urban "Marshall Plan." They expect you to fund it. But such a proposal merely would sap the economic vitality of cities in the name of saving them. And caving in to such special interests and their supporters in Congress, who are eager to ex- ploit a change in Administration, means you risk a rerun of the scandals that plagued federal housing subsidy programs in the 1980s. A reform of housing policies will be no easy task. Despite HUD Secretary Jack Kemp's ef- forts to root out waste, inefficiency, and corruption in federal housing programs, many of the old problems remain. While Secretary Kemp took necessary steps to clean house, considerably more work needs to be done by the successor you have nominated, former San Antonio mayor Henry Cisneros. You clearly understand that a strong economy is the best guarantor of an ample and afford- able supply of housing. Federal housing policy, like other areas of domestic policy, should be guided by fiscal prudence, not by an erroneous assumption that government is the best provider of supposedly vast unmet needs. You also appreciate that the best housing policy in poor neighborhoods is one which empow- ers poor families while reducing the power of federal and local bureaucrats. Your support for many of the empowerment initiatives of Jack Kemp is a hopeful signal that you intend to fight for them, despite the opposition in Congress of many members of your own party. To achieve affordable housing for Americans, your housing policy must include:

Action 1: Crack down on inefficiency, waste, and corruption in federal mortgage Insurance and subsidy programs. Many of the problems plaguing HUD programs that came to light during the 1980s were dealt with by Jack Kemp. But many remain in various mortgage insurance programs of the Federal Housing Administration (FHA), which is part of HUD. Problems are also occurring in other housing-related agencies, such as the Farmers Home Administration (FmHA) and the Department of Veterans Af- fairs (VA). Legislation and further management reforms are needed, including closer scrutiny of constituency pressure from Capitol Hill.

Action 2: Continue Jack Kemp's agenda for giving residents of public and subsidized housing more control over their projects. In the campaign, you voiced your strong support for resident management of HUD-funded projects. To make resident management and ownership more widespread, however, you will need to challenge the congres- sional committees and housing authority interest groups that seek to thwart Kemp's initiatives.

A Strategy for Sound Housing Policy 3

4 A Strategy for Sound Housing Policy

Action 10: Use federal subsidies for the homeless primarily to treat the mentally III and sub- stance abusers, not to subsidize housing Costs. Homelessness is mainly the result not of a housing shortage, but of welfare and mental health systems that allow seri- ous mental health problems, including severe substance-abuse problems, to go untreated. Urge Congress to fund programs under the McKinney Homeless Assis- tance Act that provide long-term shelter and care to the mentally ill. Do not use the existence of "street people" as an excuse to embark on expensive housing construc- tion programs - the homeless will gain little or nothing from them.

These ten recommendations rest on a basic principle: limited federal intervention in the hous- ing market is sound policy. Housing problems require solutions other than more handouts to de- velopers and middle-class homebuyers. The United States is the best-housed nation in the world. !2 Where there are shortages in housing, they tend to be theresult of an overabundance of bureaucracy. Thus, while reforms certainly are needed, you must resist the pressure for massive new construction programs. As you consider reforms to slice through housing bureaucracy at all levels of government, you must be prepared to overcome resistance from entrenched bureau- crats in your Administration and developer lobbies on Capitol Hill. To do this, you must resist overheated rhetoric claiming that America has a worsening hous- ing affordability crisis, and that drastic, coercive, and expensive steps must be taken by Wash- ington to solve the crisis. Some liberals and developers are practically salivating at the thought of HUD becoming a cash cow for construction and rehabilitation programs. They are falsely al- leging that the federal government under Ronald Reagan and George Bush "neglected!' housing issues for twelve years. In this way they can boost HUD spending to ever record-high levels. Moreover, they seek to expand exactly the kinds of programs that increase, not decrease, wel- fare dependency. You have promised fiscal and personal responsibility to be major themes in your administration's domestic policy. If you are to make good on this promise, you must allow housing markets to function more freely, using federal action as a means of ensuring that oppor- tunities are available to all, and you must make sure that housing help goes to those who really need it, not middlemen. If you do that much, while confronting the powerful housing lobby, you will have made a great contribution to America's housing policy.

WHAT REALLY HAPPENED UNDER REAGAN AND BUSH In stark contrast to the picture painted by many interest groups, the past twelve years have seen improving housing affordability. Moreover, federal spending on housing increased stead- ily and substantially during the period. You have been told, of course, that housing funds were slashed during the Reagan and Bush years, making housing unaffordable for tens of millions of Americans and rendering homeless millions more. Liberals in Congress frequently have made this charge. For example, Represen-

A Strategy for Sound Housing Policy 5

tative Charles Schumer, the New York Democrat, declared in 1989: "Ile @eagan Administra- tion systematically decimated the nation's [low-income] housing supply." Joining the chorus of such claims are lobbyists and supporters of real-estate trade organiza- tions, such as the National Association of Realtors, and state and local government organiza- tions, such as the U.S. Conference of Mayors and the Council of Large Public Housing Authorities. The Reagan Administration's modest steps to rein in wasteful and expensive fed- eral housing programs were denounced even as HUD outlays kept rising. The media also will expect you to reverse the supposed collapse of federal support for hous- ing, and end the resultant misery. As ABC News Assignment Editor Susana Ramirez recently announced: "In the last few years, I have watched as this country changed from the land of milk and honey that my parents willed to me, o a landscape of homeless and underprivileged remi- niscent of the worst of the Third World.'@ There is one problem with such rhetoric. It is patently false. The claims that federal spending declined, that housing became less affordable, and that a shortage of housing led to millions of Americans becoming homeless, do not withstand any scrutiny. If you are to develop a sound housing policy, you must reject this mythology. MYTH #1: Federal housing spending was slashed in the 1980s. FACT: It increased.

The cuts in the federal government's housing budget were reductions in authorizations, not spending. Authorizations permit a federal agency to incur obligations to spend an amount over some specified or unspecified period. Outlays represent the actual funds that an agency spends in a given fiscal year. As an analogy, an authorization is a credit limit on a h T'sehold's ability to borrow; an outlay is the amount that the household draws on that account. Congress did authorize a spending ceiling for HUD in fiscal 1983 of $16.6 billion, a total less than half the $34.2 billion of fiscal 198 1. This reflected a cut in authorizations for new housing construction of roughly 80 percent. Special interests and advocates for developers constantly refer to this as "evidence" of massive cutbacks. Yet HUD outlays-that is, actual money spent on housing-continued to increase. The main reason for this change in authorization was the cancellation of the Section 8 New Construction program. That program was locking the federal government into huge, multi-de- cade commitments to subsidize rents for low-income renter households in new, privately built projects. The Reagan Administration asked Congress to terminate the program, which had re- sulted since its inception in the mid-1970s in enormous per-unit costs. Although authorizations were sharply curbed in the early 1980s, HUD outlays actually in- creased throughout the 1980s, and are climbing at an even faster rate now. As Chart 1 indicates, the HUD budget (that is, outlays) was a then-record-high $14.9 billion in fiscal 198 1; when President Reagan left office in 1989, outlays had risen to $19.7 billion-they were not cut by some 70 percent to 85 percent, as many housing advocates wildly claim. Spending has since ac- celerated. By the end of the current 1993 fiscal year, the Office of Management and Budget ex- pects the total to exceed $28 billion.

6 A Strategy for Sound Housing Policy A direct result of Housing and Urban Development Spending: this change in policy is that HUD's low-in- Reagan Cut Authorizations, But Outlays Kept Climbing come housing subsidy programs increasingly are serving more $40 BlIllons of Dollars households. Whereas HUD Buys Back Loans from only some 3.3 million Public Housing Authorities. Loans Were Then Forgiven. households were re- 30 . ................................ ............................ ....... ceiving subsidies in fiscal 198 1, over 4.3 million households 20 ..................... ....... ........ ....................... ..................... were receiving subsi- dies in fiscal 1989. The total is expected 10 . ...... .............. Authorizations ................................................. to rise to over 4.7 mil- Outlays lion by the close of L L L ' _j fiscal 1993. While a 1977 1979 1981 1983 1985 1987 1989 1991 1993 sound federal housing Not.: Data are for Fiscal Years. 1992-1993 are estimates. policy, of course, Ulti- Source: Budget of the US Govemment Fiscal Year 1993, Historical Tables. mately would reduce Herloge DdaChM _j the need for subsidies, the claim that the number of households receiving HUD housing subsidies fell over the past twelve years is false. MYTH #2: Housing is becoming less affordable. FACT: Housing costs have declined. The cost of housing, whether to own or to rent, never reached crisis proportions at any time during the past twelve years. In fact, since the mid-1980s, the cost of housing has become stead- ily more reasonable. Mort- HUD Housing Subsidies: Over 100,000 Now gage rates, for example, Households Added to the Rolls Each Year which averaged 14 percent to 15 percent during 198 1 - 5.0 Mlfilons of Housoholcls 1982, after rising rapidly during the Carter years, have steadily declined. X 4.5 .......................................................................................................... They stood at under 8 per- cent for much of 1992. IN. ................................. . ..... Kl@ From July through Septem- 4.0 ................. X .......... .. ... .......... .. ... N": ber 1992, thirty-year, fixed- By 1993, the Estimated 4.7 million rate home purchase Housholds receiving HUD Housing 35 11 Contain as Me ny People mortgages av raged only as Virginia and Massachumtts Combined 7.88 percent. By contrast, the rate averaged about 1981 1983 1985 1987 1989 1991 1993 12.5 percent in 1980. Note: Data are for Fiscal Years. 1991-1993 are estimates. Source: U.S. Department of Housing and Urban Development Ewanding For this and other rea- the OMoininmes for Empowerment Now Choices for Residents. Heritage DataChart sons, the cost of owning a

6 "Average American Family More Able to Buy Home," The WashingtonTimes, November 17,1992.

7 Ibid. 8 See The State ofthe Nation's Housing 1992 (Carnbridge, Mass.: Joint Center for Housing Studies of Harvard University, 1M), Table A-1, p. 28. Indeed, the drop would have been far greater if expected appreciation had not fallen by so much during 1989-91. ndS_OL128 Dollars

8 A Strategy for Sound Housing Policy

9 Ibid. 10 Robert Rector, "How the New Census Report Dramatically Overstates Poverty in America," Heritage Foundation Executive Memorandwn No. 339, August 31, 1992; Rector,'7be Paradox of Poverty: How We Spent $3.5 TrillionWithout Changing the Poverty Rate." Heritage Lecture No. 410, 1992. Some $40 billion of the over $225 billion in anti-poverty assistance went to persons in institutional settings, mainly nursing homes. 11 U.S. Department of Housing and Urban Development, Office of Policy Development and Research, A Report to the Secretary on the Homeless and Emergency Shelters (Washington, D.C.: U.S. Department of Housing and Urban Development, May 1984).

12 Martha R. Burt and Barbara CoheA America's Homeless. Numbers, Characteristics, and ProgramsThat ServeThm (Washington, D.C.: Urban Institute Press, 1989). 13 Martha R. Burt, "Developing the Estimate of 500,000-600,000 Homeless People in the United States in 1987," in Cynthia M. Taeuber, ed., Enumerating Homeless Persons: Methods and Data Needs (Washington, D.C.: U.S. Department of Commerce, Bureau of the Census, March 1991), pp. 130-38. 14 This figure actually represents an upward revision from an earlier estimate of about 230,000. See U.S. Bureau of the Census, 1990 Census ofPopulation and Housing Data Paper Listing (CPH-L-22 through 72). reprinted in U.S. Bureau of the Census. Statistical Abstract ofthe United States: 19-02, 112th ed. (Washington, D.C.: U.S. Government Printing Office, 1992@ p. 57. 1S See Cal F. Horowitz. "Homelessness Myth Can't Ignore the Numbers," Houston Chronicle, May 6, 1991. 16 Pamela J. Fischer, Alcohol, Drug Abuse and Mental Health Problems Among Homeless Persons: A Review oJrthe Literature, 1980-1990 (Executive Summary) (Rockville, Maryland: U.S. Department of Health and Human Services, Alcohol, Drug Abuse and Mental Health Administration, March 1991). 17 George Vemez et al., Review ofCalifornia's Programfor the Homeless Mentally Disabled (Santa Monica, CA: RAND Corporation, 1988). 18 Cynthia Reed-Pinckney, A Status Report on Hunger and Homelessness in America's Cities: 1992 (Washington, D.C.: U.S. Conference of Mayors, 1992). 19 Peter Rossi. Without Shelter: Homelessness in the 1980s (New York: Priority Press Publications, 1989), p. 24. Ile figure would likely be a good deal higher if women and children were excluded from the data.These data also revealed high incidences of substance abuse among die homeless. 20 Such diseases are those that affect a person's perception of himself as well as external reality.They principally cover die various kinds of schizophrenia and manic-depressive psychosis, the latter also known as "bipolar disorder." These are both physical a psychiatric problems. as they greatly impair human brain processes. See Richard W. White, Jr., Rude Awakenings: What the

Initially very much the product of the widespread deinstitutionalization from mental hospi- tals, their presence has been aggravated by misguided community mental health policies, plus court decisions that grant the mentally ill a "right" to freeze to death. Most experts agree that roughly one-third of the homeless are seriously mentally ill.21 yet this may be an understatement. One study of psychiatric disorders among residents in Balti- more homeless stLejters showed that some 40 percent of the women had at least one major per- sonality disorder;22 another study,3f the homeless in Boston revealed the ratio to be about 70 percent among homeless women. 2 Even homeless advocates themselves, such as lawyer Rob- ert Hayes, founder of the National Coalition for the Homeless, have adm@id to underplaying mental illness, for political reasons, as an explanation for homelessness. Since the issue is far more complicated than "a lack of housing," it follows that solutions to the problem primarily must lie outside housing construction, whether public or private. The real- ity is that there are solutions. As a general rule, the best approaches are those least hampered by well-meaning federal rules. When government dictates in fine detail the operations of shelters, halfway houses, and detoxification clinics, it diminishes their effectiveness. This is because of paperwork requirements, and the fact that bureaucrats are far removed from the actual problem. Examples of successful approaches to helping the homeless get back on their feet include: + The Robert Wood Johnson Foundation, during the 1980s, conducted a nineteen-city dem- onstration outreach program. The program offered medical services to the homeless in the areas that they firquent, rather than scattering such service provision around an entire city. By build- ing up trust among the homeless, community outreach workers were jkle to coax many among the homeless to leave the streets and come into a clinic for treatment. + A Los Angeles-based charity, A Community of Friends, operates a four-unit apartment complex for the mentally handicapped, fronted by a five-bedroom house in nearby Hollywood. Residents pay about $320 in monthly rent. Resgents receive assistance with employment searches, episodic health care, and counseling.

A TEN-POINT EMPOWERMENT STRATEGY FOR HOUSING POLICY Working with the new Congress, Mr. Clinton, you can insure that housing supply, condi- tions, and affordability-already in good shape-continue to improve. But it will not be easy. HUD is viewed as an open cash register by many in the real estate industry. You will need to hold the line against housing industry lobbyists and their friends on congressional committees

A Strategy for Sound Housing Policy I I

27 See U.S. General Accounting Office, GAO Audits ofAccounting and Financial Management Systems at the Federal Housing Administration, GAO/T-AFMD-89-14, September 1989. FHA, created in 1934, since the late 1960s has been part of HUD. This was not the first time FHA scams came to light. There had been massive fraud, for example, in the late 1960s and early 1970s in FHA-insured HUD production programs known as Section 235 and Section 236. 28 U.S. General Accounting Office, HUD Reforms: Progress Made Since the HUD Scandals but Much Work Remains, GAO/RCED-92-46, January 1992, p. 2. 29 U.S. General Accounting Office, Financial Audit: Farmers Home Administration's Financial Statementsfor 1989 and 1988, GAO/AFMD-91-36, May 199 1. p. 13.

To deal with this, you should instruct your new HUD Secretary and his top staff to continue and expand the HOPE (Homeownership and Opportunity for People Everywhere) program, en- acted by Congress as Title IV of the National Affordable Housing Act of 1990. This program provides matching planning and implementation (that is, rehabilitation) grants to resicknt and other nonprofit organizations. It enables such groups, who do a better job than PHAs, JJ to man- age and ultimately own public housing (HOPE 1), private multifamily (HOPE 2), and private single-family (HOPE 3) projects, taking them off federal hands in the process. These three pro- grams have received a combined $351 million in each of fiscal years 1992 and 1993. At the same time, you should pressure Congress not to authorize new federal spending to prop up existing projects. For example, HUD plans to spend some $600 million over the next five years to reconstruct high-rise public housing in Chicago, despite the fact that these proje for years had decayed largely because of mismanagement by the Chicago Housing Authority. Another example: The NCSDPH recommends $7.5 billion in new HUD spending (in 1992 dol- lars) over the next ten years on "distressed" public housing nationwide, again much of it in de- crepit condition due to housing authority mismanagement. The objectives of such new spending could be better realized, with lower subsidies, through HOPE.

Action 3: Eliminate drug dealers from public housing.

Too many public housing projects have become safe havens for drug dealers, many of whom are violent and rob tenants and visitors alike. Gun battles between rival @rug dealers are causing residents in some projects to become prisoners in their own apartments. 5 Part of the problem can be traced to the lack of incentives found in public ownership. Bureau- crats, even dedicated ones, do not have any ownership commitment to projects and are less mo- tivated to protect the housing projects than the residents who live there-a problem that HOPE addresses.

Another major reason is that federal policy is confused. On the one hand, the federal govern- ment is subsidizing lawyers through the Legal Services Corporation (LSQ, many of whom fight to prevent eviction from public housing of tenants already convicted of drug dealing. On the other hand, the Anti-Drug Abuse Act of 1988 explicitly prohibits residence in public hous- ing by persons engaging in criminal activity, including drug dealing. From the standpoint of public policy, the situation is absurd. Yet Congress consistently refuses to address this confu- sion, continuing to fund LSC without any changes in policy. You should ask Congress to continue funding the Public Housing Drug EUmination Program, established in the 1988 Anti-Drug Abuse Act. The program received $175 million in funding for fiscal 1993. But further, you should give strong support to those aggressive public housing authorities who are willing to tackle the problem of drug-infested public housing. A good model is the work of Vincent Lane, chairman of the Chicago Housing Authority. Lane has initi- ated unannounced "sweeps" of Chicago projects to rid them of drug dealers, many not even on apartment leases. As a result, much cf Chicago's public housing is more livable now than when Lane took over some four years ago. 6You should also press for legislation placing restrictions

14 A Strategy for Sound Housing Policy

One of the most tempting arguments about the notion of a "shortage" of affordable hous- ing is that if only government built more new housing or rehabilitated more existing hous- ing, either directly or by subsidizing rents in privately owned dwellings, the shortage would be alleviated. Experience has shown, however, that this is an exceptionally expensive way of doing things. Pushing up the cost are opportunities for political graft, often disguised as "project over- head." U.S. News & World Report editor David Gergen in 1989 reported that overhead costs for HUD-sponsored housing construction run to "40 percent and beyond," a figure contrastinmith the administrative costs of the Social Security program, which is less than 1 percent. Such has been the case for many years. A 1970s investigative report of HUD housing programs indicated that bureaucratic blundering,lax regulatory oversight, and thievery cost taxpayers more than $600 million by 1Y76. 8 Many of the project sponsors at that time contributed heavily to political candidates. 9 Research shows that rent certificates and voupliers reach roughly twice as many needy households as HUD-assisted new construction."u Both the voucher and certificate programs subsidize tenants using the existing rental stock. Under these similar, though not identical, programs, HUD allocates "rent stamps" to public housing authorities, who in turn enter into contract with participating landlords. Eligible tenants apply the assistance toward rent among a wide choice of available apartments. Each voucher or certificate is usable for up to five years. Congress has appropriated funding for fiscal 1993 to create over 35,000 new or "incremental" vouchers and certificates, divided fairly evenly among the two. The cost of each is about $600 million. This $1.2 billion is in addition to funds to renew existing con- tracts. To house more families more efficiently, you should ask Congress to cancel the $700 million going for public housing development in fiscal year 1993 ($300 million for the oddly named "HOPE VI" program) and use the money instead for vouchers. Far more tenants could be assisted through such action. You should also ask Congress to reduce the maximum period of voucher and certificate use from five to three years, and make each available to households on a one-time basis only. To use your own metaphor, a household's reliance on assistance should be a temporary "hand-up," not a long-term handout. Given that the five-year cost of each program is potentially well over $30,000 per recipient, this action would be a modest, overdue, cost-saving step. Further, you should tie such assistance to a "workfare" requirement. No household should be eligible to receive a voucher or a certificate unless an adult is employed or will- ing to undergo job training.

A Strategy for Sound Housing Policy 15

Action 5: Avoid schemes that would reduce or eliminate homeowner tax breaks; If they are Instituted, use extra revenues to cut taxes, not subsidize more housing.

The largest federal housing benefit goes to predominantly middle-class and upper-middle- class homeowners. This "subsidy" represents the various income tax deductions, deferrals and exclusions that homeowners can itemize on their tax returns. The Joint Committee on Taxa- tion estimates that during 1993-1997 the crulative revenues foregone from various home- owner tax breaks will exceed $440 billion. I In recent years, the Congressional Budget Office (CBO), and other research advocacy orga- nizations have recommended reducing or eliminating certain homeowner tax breaks, includ- ing the mortgage interest deduction. The CBO, in its 1992 report on spending and revenue options, for example, proposes eliminating the mortgage deduction altogether, wh*Sh the CBO says would raise over $250 billion in new federal revenues over 1993-199P Univer- sity of North Carolina City and Regional Planning professor Michael Stegman would cap the mortgage interest deduction for all homeowner-taxpayers at the 15 percent tax bracket, and tax 30 percent on capital gains from the sale of a home. Steg TIN Ss measures, respectively, would raise $15 billion and $10 billion in new taxes annually. Any change of this kind would hit existing homeowners because it would reduce home val- ues. But if you want to make the burden of taxation more equitable, you should combine any limitation in the deduction with income tax rate cuts across all income levels. The Heritage Foundation's Prosperity Plan, released early in 1992, showed how tp, es could be cut, espe- cially for working families, while still achieving a balanced budget.44

Action 6: Refuse to establish HUD's new secondary mortgage market office until it demonstrates a willingness to avoid heavy-handed management of Fannie Mae and Freddie Mac.

41 JointCommittee onTaxation, Estimates ofFederal Tax Expendituresfor Fiscal Years 1993-1997 (JCS-8-92) (Washington, D.C.: U.S. Government Printing Office, April 24,1992), p. 13. 42 Congressional Budget Office, Reducing the Deficit: Spending and Revenue Options, A Report to the Senate and House Committees on the Budget as Required by Public Law 93-344 (Washington, D.C.: U.S. Goverrunent, Printing Office, February 1992). pp. 294-296. 43 Michael A. Stegman, More Housing, More Fairly: Report ofthe Twentieth Century Fund Task Force on Affordable Housing (New York- Twentieth Century Fund Press, 1991), p. 18. 44 Scott A. Hodge, ed., A Prosperity Planfor America: How to Strengthen Family Finances, Revive the Economy and Balance the Budget (Washington, D.C.: The Heritage Foundation, 1992).

4S See Carl F. Horowitz, "H.R. 2900-Does It Reduce the Risk of Fannie Mae and Freddie Mae Failure?" Heritage Foundation Issue Bulletin No. 168, November 26,1991. Originally. the OSE provisions were part of a House-sponsored bill. H.R. 2900. 46 Letter from Secretary Jack Kemp to Rep. Chalmers Wylie (R-OH), June 6. 1990, p. 7.

payment provisions to apartments built under federally assisted housing programs beyond those the LIHPRHA currently covers.

Action 6: Adopt the recommendations of the Advisory Commission on Regulatory Barriers to Affordable Housing.

Housing is more expensive than it should be, especially in certain regions, because of costly regulation at all levels of government. In July 1991 the Advisory Commission on Regulatory Barriers to Affordable Housing re- leased its final report. It pointed out numerous examples of federal, state, and local overregu- lation of housing and vacant land. Examples: 0' Land developers in central Florida must add a $15,000 surcharge to the price of a new home to cover the costs of excessive regulation. of A proposal to build 51 two-family houses in Brooklyn, New York, took 22 months to gain environmental approval, even though a full environmental impact statement was not needed. of The permit approval process for residential development in Orange County, Cali- fornia, typically adds $20,000 to the cost of a single-family unit. The Commission's report called upon the federal government to take several steps to elim- inate, reduce, or streamline such regulation. It called for substantial participation by the states to carry out thi federal agenda, as states are closer to actual problems that homebuilders face. 4 Your Administration should continue using HUD as a bully pulpit to promote deregula- tion at all levels of government. While there are limits as to how far Washington can intrude into the affairs of state and local governments for this purpose, your Administration can fol- low through on several steps that Jack Kemp has initiated. You should at least do three things. First, condition housing assistance to states and locali- ties upon their removal of onerous regulations. This action requires congressional approval. By amending the 1990 housing legislation concerning Comprehensive Housing Affordabil- ity Strategy (CHAS) requirements to make receipt by states and localities of certain forms of HUD housing assistance contingent upon a demonstration of progress in reducing unneces- sary housing regulation, Congress will be making a subatantial contribution toward lowering the compliance and delay costs of housing production."" Second, increase the profile of HUD's Regulatory Reform for Affordable Housing Information Center, established early in 1992. This Center provides information on reducing regulatory costs. Third, waive certain federal regulations that apply to housing development in those states and localities that have demonstrated ample commitment to reducing their own regulatory burdens. The best way to do this would be to create an inter-agency council of sub-Cabinet members of federal agen- cies, such as HUD, the Environmental Protection Agency, and the Army Corps of Engi-

18 A Stmtegy for Sound Housing Policy

49 By the end of this summer RTC already had liquidated over 650 savings & loans with some $220 billion in deposits. See SUBM Schmidt. "RTC Sales Said Well Under Book Value," The Washington Post, September 11, 1992. 50 RTC includes multifamily residential properties under the category of cominercial real estate. Such real estate, which includes a well office, retail, hotel/motel, and industrial properties, totalled $7.7 billion by the close of 1991. 167 multifamily properties were sold off in 1991. See Statement of Richard L. Fogel, Assistant Comptroller General, General Government Programs, ResolutionTrust Corporation: Performance Assessmentfor 1991, GAO/r-GGD-92-14 (Washington, D.C.: U.S. General Accounting Office. February 26, 1992), Chart 7. 51 Statement of Charles A. Bowsher. Comptroller General of the United States, Resolving the Savings and Loan Crisis: Billions More and Additional Reforms Needed (Washington, D.C.: U.S. General Accounting Office, GAOfr-AFMD-90-15, April 6. IWO).