Can a Smaller HUD Fix the Housing Crisis?

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1:29Bloomberg Audio Studios. Podcasts. Radio. News. So we're going to do something a little different today. I'm here with my co-host, Sarah Holder. Hey, Sarah. Hi, David. Sarah doesn't just host The Big Take. She's also someone who covers housing for Bloomberg. And Sarah, you have written a new story for Bloomberg Businessweek. Yes. Back in July, I took a trip down to Washington, D.C. to meet Scott Turner, who's the new secretary of the Department of Housing and Urban Development. I met him in the agency's nearly 60-year-old headquarters. And one of the first things he showed me was this big white cinder block that was on his office floor.

2:06That brick right there, y 'all see that brick? That brick fell right here where my closet is and hit two feet above my head. While you were in the office? Literally, when I was walking out of my office, the brick fell. This is one of the hazards, I guess, of working for HUD. Yeah, Turner has a lot of problems with this building. It's got dim lighting, elevators that are often out of service, bad air quality. HUD staffers, too, have complained about this building for years. When I visited, a sign over one of the entrances said, Welcome to HUD, and it was missing the M. Well, that is not a good look for the agency that's responsible for enforcing housing standards in the U.S., is it?

2:43Well, that's what Turner has been arguing. But rather than try to fix HUD's existing building, Turner has announced plans to move out of the city entirely and into a fancier office building in the suburbs of Alexandria, Virginia. It's one that's currently occupied by the National Science Foundation, which is facing drastic cuts from the Trump administration. And the move is still a little bit in flux, but Turner sees it as a symbolic win. He wants the new building to help usher in a new golden age, as he puts it, for the agency. It's a culture shift. It's a paradigm shift. And so that's what we mean going from the old to the new, going from mediocre to excellent.

3:26And David, now would be a great time for HUD to be excellent because the country is in the midst of a historic housing crisis. The U.S. has sky high housing costs, record homelessness levels and a nationwide shortage of affordable housing. And HUD has an important role to play in solving all that. Its most pronounced program is housing vouchers, which is the direct support that HUD pays on behalf of tenants to landlords for low-income people for millions of households across the country. This is Bloomberg CityLab reporter Kristen Capps, who wrote and reported the story with me and who's an expert on all things HUD.

4:03It provides the support, the financing for the many affordable housing developers and the many nonprofits that build affordable housing that provide services for homeless people across America. HUD does a lot more things than that. HUD also enforces anti-discrimination laws and provides mortgage insurance for first-time homebuyers. Basically, HUD is in charge of making sure Americans have a safe, affordable place to live. Right. But Turner is facing down this housing crisis with a HUD that's nearly 30 percent smaller than it was before Donald Trump took office and with a budget that the president had proposed cutting by more than 40 percent.

4:43Turner had supported those proposed budget cuts, and he's also pushing other policies that could shrink HUD's programs. The budget doesn't have anything to do with the mission. The mission remains the same. I'm David Gurra. And I'm Sarah Holder. This is The Big Take from Bloomberg News. Today on the show, HUD Secretary Scott Turner's mission to kick off an affordable housing building spree while he supports policies that could kick millions of renters off of government housing aid. What Turner's plan could mean for the U.S. housing crisis.

5:21Like many HUD secretaries before him, Scott Turner didn't come into the role with much experience in housing policy. But he told my co-host Sarah Holder that HUD's mission of serving low-income communities is personal to him. I've always had a heart for the hurting and a heart for those who were downtrodden. Secretary Turner grew up in the suburbs of Dallas in a family that didn't have much money. I understand struggle all too well. His parents divorced when he was 10 years old. He talks about this a lot as sort of a pivotal moment in his childhood. Growing up in a home where your parents are not always at peace, when there's confusion and chaos and arguments and at times violence, it makes it very hard for a child.

6:15And so the early years of my life, that was what my home was like. His parents weren't on any federal housing assistance, but other members of his family were. His wife, Robin, was on Section 8 growing up. Turner ended up getting a full ride to play football in college and played nine seasons as a cornerback in the National Football League. After he retired from the NFL, he dabbled in politics. Starting in 2012, he served two terms in the Texas House of Representatives. And Bloomberg's Kristen Capps, who worked on this story with Sarah, says housing didn't appear to be high on the list of Turner's political priorities back then.

6:51He doesn't have a strong record of passing any kind of housing bills. But in 2018, Turner landed a job in the first Trump administration. He becomes the head of the White House's Council on Opportunity Zones under the first Trump administration. And so the Opportunity Zone program was basically a tax break for developers to develop in distressed neighborhoods. in the country. And so Scott Turner used his experience in politics, his experience in public speaking to kind of helm that council where he traveled around the country, basically preaching the gospel of Opportunity Zones, talking to low-income communities across the country about what this sort of tax break for developers program could do for them.

7:33So that's kind of the first time that we see him intersect with the Trump administration. The Opportunity Zone program ended up being a controversial one. It attracted more than$100 billion in investment, far more than anticipated. But research suggests the program poured money into areas already primed for development, and jobs mostly went to outside workers. Under President Biden, Opportunity Zones went on the back burner, and Turner went back to Texas. He became an associate pastor for a Dallas-area Baptist megachurch and chief visionary officer for a multifamily real estate developer. Then, when Trump was reelected, he tapped Turner to run HUD.

8:13It's a pleasure to be here today to introduce my friend and fellow Texan Scott Turner to be the next secretary of the U.S. Department of Housing and Urban Development. What are his ideas and vision for HUD? What does he want to see it turn into under his leadership? So one of the big things that housing advocates sort of noticed about Scott Turner in his confirmation hearing was he really emphasizes the importance of building affordable housing. We have a housing crisis in our country. We have the American people and families that are struggling every day. Which is something a lot of people across the space agree on as one of the ways to get America out of this housing crisis.

8:57We have a housing shortage of 4.7 million homes as much as 7 million affordable ones. We need millions of homes, all kinds of homes, multifamily, single family, duplex, condo, manufacturing housing, you name it. But he's also someone who really distrusts the social safety net. And as we mentioned earlier, part of HUD's main role in this country is propping up the social safety net with vouchers that they disperse to 9 million tenants across the country and their landlords. So he's really focused on supply and he's really, really distrustful of the voucher program. In his confirmation hearing, Turner talked about slashing red tape and said it's time for the federal government and for the housing agency to do more with less.

9:44Here's a telling exchange between Turner and Massachusetts Senator Elizabeth Warren. You support additional federal investment in programs so that we can lower the cost of building affordable housing. Thank you, Senator Warren. What I do support is maximizing the budget that we do have and making sure that the money. So is that a no to additional investments? It's a yes to maximizing the investment that we have. After the break, how the Trump administration is shrinking HUD and what it means for affordable housing, fair housing protections and homelessness in the U.S.

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12:55HUD started the year with over 8 ,000 staffers. But after a few rounds of buyouts, led by the Department of Government Efficiency, Bloomberg's Kristen Kapp says around 2 ,300 of those staffers left, and HUD is now 30 percent smaller. There was already within the administration during the election conversations about cutting back programs. That's certainly been a talking point for Republican administrations before, you know, Donald Trump in his first term. So I think that HUD expected to see things like cuts to voucher programs. But Kristen says what they didn't expect was to lose so many staff.

13:37Turner made it clear to Sarah in their interview that he didn't fire all these people. When I asked Turner about those numbers, he was very, very clear that these were people who wanted to leave voluntarily. I know you all, Bloomberg, you and other media outlets have reported about these dark, deep cuts going on at Hunt. None of that is true. Tell me. We had 2 ,300 people who opted to take a different path. But we haven't had deep cuts. However you describe these departures, Kristen says, they're already taking their toll on several of HUD's key offices. The office that distributes billions of dollars in community-level block grants has shed 40 % of its staff.

14:21The office that oversees the housing vouchers have shed something like 30 % of staff. The Federal Housing Administration, which is this agency that backs mortgage insurance for many first-time homebuyers across the country. And this is a program that generates billions of dollars for the Treasury. And that office has lost something like 25 percent of its staff. Turner has said that HUD has enough staff to fulfill its mission-critical functions. And in a statement, HUD declined to comment on specific staffing changes. But current and former staffers, along with affordable housing advocates, told Sarah and Kristen that the changes at HUD have hurt its ability to carry out one of its most important mandates, preventing housing discrimination.

15:06One of the duties for HUD from when it was very first established was to enforce fair housing, to enforce the provisions of the Fair Housing Act of 1968. You know, that meant that a person, you know, could not be refused a home, could not be refused to rent, could not be refused the opportunity to buy based on their race, based on their religion. HUD has always been on the forefront of enforcing these laws. According to a HUD union leader, the number of attorneys who now work on fair housing cases at the agency is down from around 20 to single digits. When I asked Scott Turner about the level of fair housing enforcement that's going on in this country right now, he said the law will be followed.

15:53Discrimination will be rooted out. But HUD staffers say the agency is closing major discrimination lawsuits and reopening cases where it already secured settlements. HUD declined to comment on this. One advocate told Sarah that HUD has stopped pursuing cases involving allegations of discrimination on the basis of sexual orientation and gender identity. A HUD spokesperson said the agency can't comment on the status of specific cases that have not been made public and said that they were upholding the president's executive order. That order recognizes only two sexes and refutes the existence of trans people.

16:29Turner has cut some of the red tape he promised. He's pushed lawmakers to remove a federal regulation on manufactured housing that could help unlock more factory-built homes. And he's also pulled back a range of information-gathering requirements for mortgage lenders in an effort to cut housing costs. But Turner has advocated for funding changes that critics say threaten to undermine the agency's core mission. Trump's proposed budget calls for cutting HUD's overall budget by more than 40 percent. It also calls for consolidating the voucher program we've talked about and moving it to the states and cutting its funding significantly as well.

17:06It also proposed two-year time limits on vouchers, which would mean that folks who have maybe lived in public housing for six years, even while working and can't afford a market rent, would be picked out of the program. NYU researchers estimate that nearly 1.4 million households could be impacted by such time limits. But Turner has defended the cuts President Trump has proposed. He's really re-emphasized the idea of being efficient and effective. And he said that, you know, we have record numbers of people experiencing homelessness, sleeping on the streets. And HUD's budget is more than 70 billion dollars.

17:47And so his logic is that we're spending so much money and not seeing results like we should stop spending money. And members of Congress have said they don't understand that logic, that if the problem is so grave and so deep, part of the issue is that HUD has been underfunded for decades and they want to see more targeted investments and they don't want to see millions of tenants being evicted overnight from their residences because they say that that is really the thing that could increase homelessness in this country. Lawmakers have since proposed their own more generous spending plans for HUD.

18:22So the House and the Senate have submitted their own budgets, which restore a lot of that voucher funding, which restore a lot of that affordable housing production funding. Congress has until September 30th to pass a final budget, a budget that housing advocates hope won't look much like the one the president has proposed. But Sarah says that doesn't mean the voucher program is safe. Putting time limits on vouchers is still on Turner's priority list. And he's also signaled he wants to add more work requirements to rental aid. Social safety nets were never meant to be a hammock, but instead they should be a trampoline.

18:57They were never meant to be a resting place, but instead a place to where you can get on your feet and then to be projected out to live a life of self-sustainability. And so the concern is even without cutting the budget by 40 percent, you could still sort of reduce the size and the importance and the significance of the voucher program through these other sort of legislative changes. Instead, Turner wants HUD to focus on getting as many new homes built as possible. Do you have a number? I don't have a number. The number that really sticks out of my head every day is$7 million, because that's the need that we have.

19:32But I believe by taking down these burdensome regulations, by building public-private partnerships, by being very active with our state and local partners, that we can, and the president obviously is very in tune to this has made it a priority that we can build many housing units, neighborhoods, and projects in the years that we have here, but one day at a time. The problem is building anywhere close to 7 million homes will take a while. There are millions of Americans who need help from HUD to pay the rent today. Thousands of landlords who rely on rental aid to make their mortgages today. and a whole network of affordable developers who use HUD money to break ground on new projects today.

20:20Sarah, I want to wrap up by returning to something you said, which is Scott Turner, the secretary of HUD, is somebody who acknowledges the housing crisis, believes fervently in the need to build more housing. And at the same time, he's very skeptical of a lot of the social safety net programs. How hard is it for him to hold both of those things at once, hold both of those beliefs at once? A lot of the people I've spoken to have told me it's really hard to do both of those things at once. Because in its current form, at least, the affordable housing ecosystem in the United States really depends on money from HUD.

20:55It depends on the voucher program. It depends on the work of people who are ensuring that folks who can't afford to move when they're being discriminated against have protections. So if cuts to the voucher program go through, even in the future, if HUD is no longer able to defend tenants' rights in the same way, there could be, sources say, even more homelessness. Because what happens to folks who are evicted from their public housing after two years if time limits are to go into effect? What happens to people who can't work, who are caregivers for their family, if work requirements were to go into effect?

21:28The market rents right now are not affordable for broad swaths of this country, and many affordable developers can't afford to build affordable housing at a profit without those subsidies from HUD. So if they cut these fundamental programs that HUD has provided for decades, Turner could make it a lot harder to address some of the underlying causes of the housing crisis that he says he cares about so deeply.

22:00This is The Big Take from Bloomberg News. To get more from The Big Take and unlimited access to all of Bloomberg.com, subscribe today at Bloomberg.com slash podcast offer. If you like this episode, make sure to follow and review The Big Take wherever you listen to podcasts. It helps people find the show. Thanks for listening. We'll be back tomorrow.

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23:01With thousands of options, from apparel and drinkware to tech and totes, it's easy to find the right fit for your brand and budget with standout choices at every price point. And with their 360-degree guarantee, you can be 4imprint certain your order will show up just right, right on time. Explore more at 4imprint.com. 4imprint. 4certain. wise is the smart way to manage the currencies you need around the globe when you send money abroad using your bank you could get hit with hidden fees and exchange rate markups there's a better way try wise wise uses the exchange rate you'd usually find on google with no unwelcome surprises plus most transfers happen in under 20 seconds which means your money arrives in less time than you've been listening to me it's simple and free to sign up when you download the wise app be smart get wise t's and c's apply Thank you.